New Brattle Report Examines New Jersey’s Energy Affordability Programs for Low- and Moderate-Income (LMI) Customers

New Jersey is aiming to decarbonize its economy and achieve 100% clean electricity by 2035. As the state navigates this major transition, it will be essential to ensure that low- and moderate-income (LMI) customers – who already bear high energy burdens and are particularly vulnerable to energy rate changes – are not left behind and that benefits of clean energy are shared equally across society.

In a new report prepared for the New Jersey Board of Public Utilities (NJBPU), Brattle experts examine energy affordability concerns for New Jersey’s LMI households, providing a comprehensive review of the state’s current LMI bill assistance programs and rate designs and presenting alternative policy and rate options to improve energy affordability. The authors evaluate the effectiveness of current bill assistance programs by using a large data set covering more than 200,000 New Jersey households receiving assistance in the 2023–2024 timeframe. They find that, while New Jersey has robust and highly effective energy assistance programs, there are opportunities to advance these programs and enhance rate offerings to support a broader base of customers and safeguard LMI customers from potential future rate increases.

Key takeaways and considerations from the report include:

• New Jersey’s Universal Service Fund (USF) program, which provides comprehensive energy bill discounts to eligible customers, successfully reduces the median energy burden for recipients to below 4% (below 2% for electricity and 2% for natural gas), meeting the program’s target energy burden level
• Currently, only 20% of eligible LMI households participate in the USF program. Participation can be increased through targeted outreach, involving a coordinated initiative from the NJBPU, utilities, and other state and local agencies
• New Jersey should consider developing bill assistance programs specifically designed for moderate-income customers, who are at risk of facing significant energy burdens as energy rates and assistance program expenditures rise
• New Jersey should review the current policy on inclining block rates and consider alternative rate designs – include time-varying rate options – that are more reflective of the underlying costs to provide electricity service to customers

The report, “An Assessment of Energy Affordability in New Jersey and Alternative Policy and Rate Options,” was authored by Principal Dr. Sanem Sergici, Senior Energy Associate Dr. Goksin Kavlak, Energy Research Associate Kailin Graham, and Senior Energy Analyst John Gonzalez.