The New Jersey Board of Public Utilities – in an order dated July 2, to be effective on July 12 – authorized each of the state’s regulated utilities to create a COVID-19-related regulatory asset by deferring on their books and records the prudently incurred incremental costs related to the COVID-19 pandemic.
The utilities are to defer those costs beginning on March 9, 2020, and through Sept. 30, 2021, or 60 days after New Jersey Gov. Phil Murphy issues an order, for instance, that the public health emergency related to the COVID-19 pandemic is no longer in effect, or in the absence of such an order, 60 days from the time the public health emergency automatically terminates, whichever is later.
The board said that it “finds the deferral of such costs is appropriate because the current catastrophic health emergency is outside the control of the utilities and is a non-recurring event.”
The board ordered all deferred incremental COVID-19-related costs be offset by any federal or state assistance that the utility may receive as a direct result of the pandemic.
As noted in the order, the International Health Regulations Emergency Committee of the World Health Organization on Jan. 30 declared the coronavirus disease of 2019 (COVID-19) a “public health emergency of international concern,” which means “an extraordinary event which is determined to constitute a public health risk to other states through the international spread of disease and to potentially require a coordinated international response.”
The board noted that Murphy on March 9 signed Executive Order No. 103 (EO 103), declaring a state of emergency and a public health emergency in response to the COVID-19 pandemic, in order to ensure the continuity of government services and protect the public.
The board on March 13 announced that New Jersey’s public electric and gas utilities had universally agreed to suspend service shutoffs given the statewide public health emergency and the effort underway in response to the pandemic.
The board also said that in response to EO 103 and in order to prevent the potential spread of COVID-19, it issued an order that, among other things, ordered all public utilities and regulated entities to immediately cease any in-home or business visits unless there was an immediate risk to health and safety; as well as waived any and all requirements that entities file paper documents with the board or with the state Division of Rate Counsel.
In addition, Board President Joseph Fiordaliso, New Jersey Lt. Gov., and Department of Community Affairs Commissioner Sheila Oliver, and New Jersey Department of Environmental Protection Commissioner Catherine McCabe on March 20 issued a joint statement asking, for instance, “that every water system, private or public, including those operated by our municipal governments, commit to a suspension of any water shut offs for reasons of non-payment, safe reconnection of anyone previously shut off, and a suspension of the use of liens as a collection practice until the outbreak of COVID-19 has subsided.”
The board added that Murphy thereafter issued several EOs, including EO 104 and EO 107, that were intended to protect the public health and limit the spread of COVID-19. Murphy on May 13 signed EO 142, which served to modify EO 122 in response to the pandemic, the board said, noting that EO 122 prohibited all non-essential construction projects from continuing in New Jersey. In EO 142, Murphy directed that non-essential construction activities could restart, subject to certain safety and social distancing requirements, the board said.
The board noted that it acknowledges that the regulated utilities’ response to the pandemic, including complying with the governor’s EOs, could cause them to incur significant COVID-19-related expenditures that could have a negative financial impact on the state’s regulated utilities.
Among other things, the board said that each utility that establishes a COVID-19 regulatory asset account is directed to file quarterly reports of the pandemic-related costs incurred and offsets, with the first quarterly report to be filed on Aug. 1, for the period ending June 30, and each subsequent quarterly report to be filed no later than 30 days after the end of the calendar quarter.