All eyes on the Assembly

Good morning and welcome to the weekly Monday edition of the New York & New Jersey Energy newsletter. We'll take a look at the week ahead and look back on what you may have missed last week.
ALL EYES ON THE ASSEMBLY — POLITICO's Marie J. French: Any chance that New York lawmakers will make significant progress on tackling climate change this legislative session rests with Assembly Democrats — a concerning prospect for frustrated environmental advocates. The Senate has left Albany for the session, but the Assembly plans to linger for a few days this week. Several environmental proposals remain pending, including a sweeping measure aimed at reducing plastic and packaging waste and two options to limit gas infrastructure.
These are the same issues that remained in the final days of last year's session. Then, the Assembly pivoted to pass the Climate Superfund measure to charge fossil fuel companies for past pollution. This year, environmental groups are pressuring the Assembly to step up on implementing more policies to support the state's climate law.
'The Senate did their job last night — again — to do something about our high energy bills. We are paying too much for pipelines we don't need,' said Jessica Azulay, executive director of the Alliance for a Green Economy.
'They have three days to act, and we are watching,' Azulay said of the Assembly. 'If they don't act, we're all in for a long, hot summer.'
The Senate passed two different gas transition measures — leaving the choice of whether to allow phasing out gas service for existing homes to the Assembly.
The more modest measure is an elimination of the '100-foot rule' for gas. That rule requires other ratepayers to subsidize a portion of the cost of new hookups, reducing upfront costs for those getting new gas service.
— The incremental step — the 100-foot rule elimination for gas — is poised to pass in the Assembly, according to two lawmakers. It was moved to the Ways and Means committee on Sunday afternoon, teeing it up for an eventual floor vote.
— The packaging reduction measure appears to be falling short, and newly announced opposition from the statewide AFL-CIO may doom the bill this year. 'Unions are not opposed to improving New York's recycling system. But are concerned that this bill goes too far, too fast, and targets the wrong materials,' a press release from industry-backed New Yorkers for Better Recycling states.
PENNEAST DECISION DRAMA — The New York Times' weekend dive into Supreme Court Justice Amy Coney Barrett leads with this example: 'Soon after Justice Barrett arrived at the court she began surprising her colleagues. Chief Justice John G. Roberts Jr. assigned her to write a majority opinion — among her first — allowing the seizure of state property in a pipeline case, according to several people aware of the process. But she then changed her mind and took the opposite stance, a bold move that risked irritating the chief justice.' The story doesn't name-check the 2021 PennEast decision, but our POLITICO colleague Alex Guillén reported at the time that, 'Legal experts have been gossiping that someone in the majority switched sides late in the game in the PennEast ruling.' — Ry Rivard
HAPPY MONDAY MORNING: Let us know if you have tips, story ideas or life advice. We're always here at mfrench@politico.com and rrivard@politico.com. And if you like this letter, please tell a friend and/or loved one to sign up.
Here's what we're watching:
WEDNESDAY— The New Jersey Board of Public Utilities meets and is expected to discuss electric utilities' plans to cushion rate increases, 10 a.m.
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Around New Jersey
— Former BPU Commissioner Mary-Anna Holden in an op-ed: 'Instead of chasing artificial deadlines and politically popular incentives, our leaders should be focused on real-world physics and economics. This means revisiting the Energy Master Plan, rethinking electrification mandates and supporting a balanced generation mix that includes reliable, low-emission sources like natural gas and nuclear while continuing to develop meaningful renewables at a pace our infrastructure can handle.'
— Tesla, for one reason or another, is storing lots of cars at the Quaker Bridge Mall.
— Weekend blaze in Wharton State Forest is mostly contained.
What you may have missed
AIMING AT THE BOTTOM LINE — New Jersey lawmakers advanced a trio of bills Thursday aimed at cutting into utility company profits.
The bills — S4260, S4304 and S4519 — all cleared the Senate Economic Growth committee. They each aim to reduce power companies' return on equity, which hovers around 10 percent in the state.
Two of the bills basically urge the state Board of Public Utilities to rein in profits, but do not set any caps on companies' returns.
A third bill, Sen. Andrew Zwicker's S4519, could quantitatively dent profits by removing a special .5 percent return companies are currently eligible for thanks to convoluted federal regulations.
Some utilities get this special 'RTO adder' for building transmission projects if they have not formally joined a regional transmission organization, like PJM. Zwicker's bill would require utilities to join PJM, thus disqualifying their projects for the adder. For PSEG, the adder means that the company's return on equity for transmission projects is 10.4 percent, rather than 9.9 percent.
The state's ratepayer watchdog, Brian Lipman, testified in support of the bill. He cited previous comments by outgoing FERC Chair Mark Christie who called the adder 'FERC candy' taken from ratepayers and given to transmission companies.
The companies argue that without the incentive, there would be fewer transmission projects, which would hurt grid reliability.
Joseph Checkley, the head of IBEW Local 94, which represents 3,300 PSEG workers, testified that the union will have less work and fewer apprenticeships if the bill passes. The union, utilities and some Republican lawmakers also said the bill doesn't address the root problem facing the state right now, which is lack of generation causing price spikes.
Utilities are also concerned that the bill would force them to join PJM at a time when Democrats have been trying to get leverage over PJM.
PSEG senior vice president Rick Thigpen said in a statement that 'we've heard many public officials criticize the shortcomings of PJM and this bill would force us to remain in that very RTO.'
'While not RTO specific, this bill would mandate that we either remain in PJM or pursue an option of joining a different RTO or creating one from scratch — two options that would be unnecessarily expensive for customers,' Thigpen said. 'This comes at a time when affordability is a top concern and we should be focusing on supporting our customers in the near-term and expanding electric supply in the long-term to enhance resource adequacy.'
Zwicker, a Somerset County Democrat, modeled the bill on a recent move by Ohio to get rid of the adder. Also, realistically, he said New Jersey cannot leave PJM anytime soon.
'I would argue that we need leverage, true, but that leverage doesn't exist because we have no other option,' Zwicker said in an interview.
While industry groups generally oppose all the bills aimed at curbing return on equity, PSEG said it supported Burlington County Democratic Sen. Troy Singleton's bill (S4260) that would prevent utilities from making 'excess profits.'
'Excess profits is not something we're in support of,' Thigpen told lawmakers during a lengthy hearing.
Thigpen said the company would be willing to submit to new annual reviews of its rates. Right now, reviews typically accompany rate cases.
Sen. Joseph Pennacchio, a Morris County Republican, wondered if the bill was even needed, since the BPU already examines utilities' finances.
'From my understanding, if the BPU is doing a good job, we're going to be saving nothing,' he said.
Another bill without a hard cap, S4304, requires the BPU to allow utilities only the 'lowest reasonable return.'
None of the bills increase the energy supply available to the state, which lawmakers from both parties agree is the only long-term solution to price spikes.
Separately, a bill to explore the role that nuclear power should play in the state cleared the Senate Energy and Environment Committee. The bill (S220) was sponsored by Pennacchio and Sen. Bob Smith, the Middlesex County Democrat who chairs that committee. — Ry Rivard
ASSEMBLY GETS OPTIONS ON GAS: The New York Senate is moving two options on efforts to limit the expansion of the state's gas system. One is a repeal of what's known as the '100-foot rule,' which requires other customers to subsidize portions of new gas hookups. If enacted, this would require developers to pay the full cost of building out infrastructure to connect to the gas system. Opponents argue this would raise new home costs and provide minimal savings to existing customers since selling more gas spreads out costs and the investments are paid off over decades. Supporters of slashing the subsidy say it runs counter to the state's climate goals and eliminates added costs from new hookups that contribute to rate increases.
The other option is a scaled back but still ambitious planning proposal to begin dismantling sections of the gas system. This renamed NY HEAT bill, dubbed the 'Customer Savings and Reliability Act,' also includes changes to the 100-foot rule. But it goes much further, allowing the Public Service Commission and utilities to involuntarily remove customers from the gas system after 2030 with several guardrails including extensive public engagement, some support in the affected area, and alternatives being provided at 'no cost.' It's not clear whether Assembly Democrats will move this broader measure, although it has won over some lawmakers. Repeal of the 100-foot rule has even more support.
Opponents of NY HEAT have pushed back on the updated measure. 'They simply want fewer people on the gas system, so they want to make it more expensive,' said Republican Assemblymember Phil Palmesano at a Thursday press conference. He promised a four-hour debate if Assembly Democrats bring the updated NY HEAT bill to the floor. Business groups are also opposed, despite specific protections for their gas service in the bill. 'As you remove users from the system, you increase the cost to users who have no choice,' said Ken Pokalsky, with the Business Council of New York State.
Proponents of a planned gas transition say customers will switch to electric alternatives anyway. The proposed planning process offers a more managed shift than the status quo, with opportunities for savings from avoided gas infrastructure savings, they say. 'As my staff and I engage more closely with the Con Ed rate cases impacting our district, I can see more clearly than ever the urgency of ending the 100-foot rule,' said Democratic Assemblymember Dana Levenberg. 'We cannot hope to bring down utility costs while still requiring utilities to maintain vast networks of gas pipelines.' — Marie J. French
BIOSOLIDS MORATORIUM ADVANCES: The Senate also passed a five-year moratorium on using biosolids — from wastewater and industrial sources — as fertilizer, topsoil or mulch. The bill also looks to be moving in the Assembly. Supporters are concerned about PFAS contamination from the waste, pointing to Maine, where farmland was contaminated by the practice.
The state's operators of wastewater treatment plants are concerned. A five-year ban on spreading biosolids on land would remove a key option to dispose of the waste product, according to the New York Water Environment Association. 'There is inadequate capacity in New York State landfills for this volume of additional biosolids, as many have limited space and biosolids often must be mixed with other debris to provide structural integrity within the landfill operational cells,' the group wrote in a letter on the bill. — Marie J. French
PSC GREENLIGHTS TRANSMISSION UPGRADES: The Public Service Commission approved more transmission upgrades linked to increased load, including from electric vehicle charging fleets and other plans. These 'urgent upgrades' need to get started more quickly than would happen if they waited for approval through a rate case, the commission decided at Thursday's meeting. The approved projects total $636 million in costs and will enable 642 megawatts of electrification upgrades — which Department of Public Service staff said was under the 'industry standard' cost of $1 million per megawatt. The 29 projects approved include $439.9 million for five Con Ed projects including to allow for electric vehicle charging at Zerega Avenue and Hunt's Point. Utilities had proposed 65 projects totaling $1.9 billion in costs. The projects that weren't approved are expected to be considered through rate case proceedings.
'We are not taking steps to subject ourselves to near-term risks in the future, we're looking to address long-term opportunities and by doing that we limit the costs, we make our investments more efficient and we make them most importantly more effective,' said Public Service Commission Chair Rory Christian at the meeting. 'This process increases transparency as well because frankly it's hard for many people to engage in rate cases. And this gives a one-stop opportunity for people to examine the various electrification efforts underway throughout the state.' — Marie J. French
WAIVER GOODBYE — POLITICO's Alex Nieves: President Donald Trump moved Thursday to eliminate California's nation-leading vehicle emissions standards, upending strict rules that had become a template for other states, including New York and New Jersey, to realize their greenhouse gas ambitions.
COLUMN ON WAIVER — POLITICO's Debra Kahn: It's a far cry from the bipartisan consensus that reigned when President Richard Nixon famously signed the Clean Air Act, which set federal air pollution levels for the first time but gave California permission to continue going further, owing to its decade-plus of vehicle emissions rules aimed at the smoggy Los Angeles basin.
EMISSIONS DISCLOSURE CONCERNS — POLITICO's Marie J. French: Business groups are preemptively ramping up opposition to a climate emissions disclosure bill in the frantic last days of session.
Led by the Business Council of New York State, industry groups are warning lawmakers against New York's version of a greenhouse gas reporting bill that's mired in legal and regulatory delays in California. There's some concern from opponents that the measure could become the last-minute 'environmental thing' lawmakers move before leaving Albany.
ACE'S RATE RELIEF — Atlantic City Electric has a plan to help customers deal with rising power prices. The plan resembles one already submitted by PSE&G and is likely to mirror what other utilities in the state will do, though some of the actions may require Board of Public Utilities approval.
ACE said it will stop disconnecting eligible customers' service from July through September. Gov. Phil Murphy previously suggested utilities take this step and PSE&G has already announced it would. ACE also plans to allow for longer repayment terms for residential customers, up to 24 months, and will submit a plan to the BPU that would give customers a deferred credit on their July and August bills that would be recovered without interest over a six-month period.
'While utility companies in New Jersey do not generate their own energy, do not set the price of electricity, and do not profit from the supply cost increases that took effect June 1, we fully understand that rising energy costs stemming from PJM's 2024 Capacity Auction are a challenge for our customers,' the company said in a statement. — Ry Rivard
FALL SHOWDOWN SET — Republican Jack Ciattarelli and Democrat Mikie Sherrill are set to square off this fall in the New Jersey general election, setting up a showdown over Gov. Phil Murphy's clean energy legacy. The Associated Press called the races for both candidates Tuesday night, not long after polls closed.
Sherrill's campaign has promised to push for 100 percent clean energy, the same goal Murphy ran on and won, and picked up endorsements from the Sierra Club and New Jersey League of Conservation Voters. Ciattarelli has blasted the governor's 'obsession with windmills' for driving up electric prices.
Ciattarelli began his speech with criticism of Murphy's offshore wind goals.
'We will adopt a rational energy policy that lowers people's monthly electric bills and stops the Democrats from putting those damn wind farms off our Jersey Shore,' he said.
He also criticized overdevelopment, something he's previously blamed the Sierra Club for ignoring.
Whether wind will be a potent issue for voters, of course, remains to be seen. In her victory speech on Tuesday night, Sherrill framed her campaign as a test of President Donald Trump's policies, though she mentioned Ciattarelli's position on Hurricane Sandy relief and, in a statement after the speech, pledged to 'slash the cost of utilities' by taking 'control of our energy future.'
In 2023, Republican legislative campaigns tried to make the environment a wedge issue, but largely failed when Democrats picked up seats in Trenton. Arguably some of those Democrats ran away from Murphy's clean energy plans and, in the years since, lawmakers have not had the stomach to turn the governor's clean energy goals into binding law.
There are some reasons why energy issues may be more potent this year, though. The biggest is that energy policy choices have demonstrably and significantly driven up people's power bills. A $25 per month rate increase took effect on June 1. Democrats blame the regional grid operator, PJM; Republicans blame Murphy's focus on offshore wind projects that are dead or delayed. — Ry Rivard
NEW GAS TRANSITION MEASURE: Democratic lawmakers introduced a new bill aimed at limiting the expansion and transitioning parts of the gas system. The re-branded new bill is the 'Customer Savings and Reliability Act.' The slimmed down, not-HEAT Act removes provisions around a 6 percent affordability target for energy bills and still eliminates the 100-foot rule to subsidize new gas hookups. For a neighborhood transition project to move forward after 2030, 50 percent of impacted customers would have to agree to get off the gas system. Installation of alternative equipment — electric heat pumps, hot water and cooking systems — would have to be at no cost to customers. Importantly, a utility can opt out of the process.
'It addresses people's concerns,' said Assemblymember Jo Anne Simon, the sponsor of the old NY HEAT and the new bill. 'A transition plan would have to be cheaper … we increase the number of hearings.' Simon said she's 'very hopeful' about the bill's prospects given the revisions. 'It will accomplish the goals of transitioning,' she said.
Environmental groups including the New York League of Conservation Voters, Earthjustice, Alliance for a Green Economy and WE ACT for Environmental Justice endorsed the new version. The measure 'would reduce costs for ratepayers, advance region-specific utility planning to decarbonize buildings at a neighborhood-scale, and provide responsible, cost-effective alternatives for heating, cooling and hot water,' the memo states.
NY HEAT's staunchest opponents are still opposed, particularly New Yorkers for Affordable Energy, which is backed by labor, pipeline companies and National Fuel. 'It's a blueprint for higher costs and unreliable service,' the group's opposition memo states. One of its members predicts layoffs if the 100-foot rule is eliminated, raising costs for developers seeking new gas hookups since they'll have to pay the full costs rather than being subsidized by other customers. — Marie J. French
CORRECTION: Assemblymember John McDonald said local governments would be involved in a new process under a revised gas transition measure. 'It's common sense, moves in the right direction, including local governments and residents in the process,' McDonald said.
BLET'S MAKE A DEAL — The union of engineers whose strike idled NJ Transit trains in May voted to ratify a deal that will raise wages to 'over $50 per hour,' the Brotherhood of Locomotive Engineers and Trainmen said Tuesday. The union said its members had overwhelmingly voted to approve the seven-year deal, which replaces one that expired before the pandemic. 'This agreement gives us the pay raises we needed, but also was done without a major hit to NJT's budget and should not require a fare hike for passengers,' union leader Tom Haas said in a statement. The head of NJ Transit, CEO Kris Kolluri, said in a statement he was pleased by the vote. The union's rank and file had previously voted down another deal, teeing up the strike that resulted in this agreement. — Ry Rivard

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Republicans have been scrambling for months to secure enough votes for Trump's megabill, which centers on extending his 2017 tax cuts and delivering on several of his campaign promises, such as boosting border security spending and eliminating taxes on tips. Support for the package has softened this month as more Republicans warn that it would add trillions of dollars to the deficit without further spending cuts. But the parliamentarian's latest rulings will force Republicans to either strip those provisions from the bill or secure a 60-vote supermajority to keep them in, a nearly impossible hurdle given that Senate Republicans only hold 53 seats. MacDonough ruled that some of the provisions have little business in a budget reconciliation bill, which can make big changes to how the federal government spends money but, under Senate rules, isn't allowed to substantively change policy. 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Byrd of West Virginia to prohibit 'extraneous' provisions from being tacked onto reconciliation bills, which are fast-tracked budget packages that allow legislation to pass with a simple majority, bypassing the 60-vote filibuster threshold. The rule makes it so that every line of a reconciliation package must have a direct and substantive impact on federal spending or revenues. Provisions that serve primarily policy goals—rather than budgetary ones—are subject to elimination by a parliamentary maneuver known as a point of order. Whether a point of order is sustained is ultimately made by the parliamentarian, who is essentially the Senate's umpire tasked with providing nonpartisan advice and ensuring that lawmakers are complying with the Senate's rules. Parliamentarians often face backlash during the budget reconciliation process, when they determine whether policy proposals comply with the constraints of the Byrd Rule. MacDonough's rulings have invalidated a number of headline-grabbing GOP provisions, including a plan requiring states to pay a portion of food benefits—the largest spending cut for SNAP in the bill. The SNAP measure, which the parliamentarian said violated the Byrd Rule, would have required all states to pay a percentage of SNAP benefit costs, with their share increasing if they reported a higher rate of errors in underpaying or overpaying recipients. Some lawmakers warned their states would not be able to make up the difference on food aid, which has long been provided by the federal government, and could force many to lose access to SNAP benefits. Republican Sen. John Boozman of Arkansas, the chairman of the Agriculture Committee, said in a statement that he's looking for other ways to cut food assistance without violating Senate rules. Another rejected provision would have zeroed out $6.4 billion in funding of the Consumer Financial Protection Bureau, effectively shuttering the agency. The bureau was created by Democrats as part of the 2010 Dodd-Frank Act in the aftermath of the financial crisis as a way to protect Americans from financial fraud. Republicans have long decried the CFPB as an example of government over-regulation and overreach. 'Democrats fought back, and we will keep fighting back against this ugly bill,' said Senator Elizabeth Warren of Massachusetts, who said the GOP plan would have left Americans vulnerable to predatory lenders and corporate fraud. The Senate parliamentarian also blocked a GOP provision intended to limit courts' ability to hold Trump officials in contempt by requiring plaintiffs to post potentially enormous bonds when asking courts to issue preliminary injunctions or imposing temporary restraining orders against the federal government. Democrats hailed that decision by the parliamentarian, noting that it would have severely undermined the judiciary's ability to check executive overreach. Senate Democrats 'successfully fought for rule of law and struck out this reckless and downright un-American provision,' Senate Minority Leader Chuck Schumer said in a statement. MacDonough also nixed provisions to reduce pay for certain Federal Reserve staff, slash $293 million from the Treasury Department's Office of Financial Research, and dissolve the Public Company Accounting Oversight Board, which is tasked with overseeing audits of publicly traded companies. Each of these proposals, she ruled, either lacked sufficient budgetary impact or were primarily aimed at changing policy, not federal revenues or outlays. MacDonough also rejected language in the bill drafted by the Senate Environment and Public Works Committee that would have exempted certain infrastructure projects from judicial review under the National Environmental Policy Act. The rejected proposal would have allowed companies to pay a fee in exchange for expedited permitting, a move Republicans argued would streamline bureaucratic delays. Also disqualified was a measure to repeal the Biden Administration's tailpipe emissions rule for cars and trucks manufactured after 2027. MacDonough ruled that the environmental provisions were either insufficiently tied to federal spending or failed to meet the Byrd Rule's strict thresholds for inclusion. The parliamentarian's decisions could, in theory, be overturned. Senate Majority Leader John Thune of South Dakota has the authority to ignore her ruling by calling for a floor vote to establish a new precedent—essentially overruling the Senate's referee. Parliamentarians have been ignored in the past, though it is quite rare. In 1975, Vice President Nelson Rockefeller ignored the parliamentarian's advice as the Senate debated filibuster rules. MacDonough has been overruled twice before: in 2013, when Democrats eliminated filibusters to approve presidential nominees, and in 2017, when Republicans expanded the filibuster ban to include Supreme Court nominations. But Thune has signaled he has no intention of going down that path this time. 'We're not going there,' the Senate Majority Leader said on June 2 when asked by reporters about overruling MacDonough. Thune could also fire the Senate Parliamentarian and replace her with one willing to interpret the rules more in line with how Senate Republicans view them. Write to Nik Popli at