Unpacking New Jersey’s Triennium 3 Straw Proposal

Before Thanksgiving, the New Jersey Board of Public Utilities (NJBPU) released the Straw Proposal for Triennium 3 of the State’s Energy Efficiency and Demand Response Programs. The Straw Proposal outlines a proposed plan for 2027-2029 energy efficiency programs. Here, we unpack a few highlights, including changes to the framework for program delivery, customer-centered program design, and a focus on market transformation. We also share a few areas where we are taking a closer review to recommend sufficient investment levels, utility cost recovery, as well best-practice metrics and coordination for low-income programs. Comments on the proposal are due December 26.  

Building on A Decade of Progress on Energy Efficiency
Spurred by the passage of the Clean Energy Act in 2018, which enacted statewide requirements for annual energy savings targets and a mechanism for utility cost recovery, New Jersey offers residents and businesses energy efficiency programs through the state and utilities to meet energy savings goals. Programs operate in three-year cycles with the goal of achieving 2% electric savings and 0.75% gas savings each year of the program. Since the passage of the Act, the state has made significant progress, improving from achieving 0.62% in electric savings and 0.24% in gas savings in 2018 to 2.01% for electric and 0.59% for gas in 2022. 

As a result, the state rose up the American Council For Energy-Efficiency Economy (ACEEE) State Scorecard from number 17 in 2020 to number 8 in 2025 with the biggest gains in utility program savings.  

For the next Triennium, which will mark a decade of commitment to energy efficiency in the Garden State, NJBPU has proposed programs focused on four priorities: energy affordabiliy to lower bills and energy burdens, reducing energy use intensity of the building stock, advancing demand response through incentivizing grid connected devices and priorities in the Demand Response Roadmap, and ensuring energy assurance through provision of reliable and resilient energy.  

Improvements and Exciting Changes in Triennium 3
As New Jersey enters this next phase, Triennium 3 looks to prioritize customer centric program and market transformation. To deploy customer centric programs, the Straw Proposal proposes efforts to help customers navigate rebates and assist with the participation process with a new website and the use of Energy Navigators, as well as new service delivery models (SDMs) that focus more on customer experience. For market transformation, the program is looking to engage actors along the supply chain to encourage market acceptance of energy efficiency technology. Coupled with workforce efforts, such as establishing a statewide Trade Ally Network, supply chain engagement has been key to adoption of heat pumps for leading states.  

Customer Centric Assistance and Education
Triennium 3 proposes two new programs to create a more customer centric approach: a clean energy buildings website and Energy Navigators. Both programs would be led by the state and would streamline the customer experience and provide educational materials. The Clean Energy Building Website would be a statewide resource with links to utility programs; educational materials for customers, contractors, and other stakeholders; information on available financial incentives; and technical. Energy Navigators will provide participating residential and business customers with a primary point of contact to assist with scheduling, advocate for customers, and help resolve program delivery issues.  

Service Program Delivery Models
NJBPU proposes to shift program offerings to service delivery models (SDMs) that focus on a customer’s journey. These new SDMs would include 4 models. Whole Premise will provide a suite of measures for customers looking to update their whole building, including electrification and grid flexibility. Prescriptive rebates will provide rebates for single measures. Energy management will encourage behavioral changes in line with the state’s Demand Response Roadmap. Market Transformation will engage upstream, midstream, and downstream market actors to increase adoption of efficient products.

Market Transformation  
The Straw Proposal looks to prioritize Market Transformation and creation of a Trade Ally network to increase adoption of efficient products. Specifically, the Market Transformation SDM is aimed at encouraging the stocking and installation of efficient electric technologies. We hope to see more efforts on midstream programs as they can engage key market actors and unlock rebates at the point of sale for contractors and customers. These programs have been successful in Maine and Vermont, which lead the nation in adoption of heat pump water heaters and air source heat pumps. Additionally, the Straw Proposal suggests creation of a Trade Allies network and certification pathways for contractors. This step can help ensure standardized training of contractors participating in utilities across the state. These networks have been instrumental in moving the needle through contractor education and continuing engagement, such as the Efficiency Excellence Network in Vermont.

Areas of Triennium 3 Where We Are Taking a Closer Look
Here are three areas where we are taking a closer look at opportunities to strengthen the plan to ensure robust investments in energy efficiency and energy affordability for all.  

Prioritizing Equity with Dedicated Savings or Spending Goal
New Jersey currently offers programs to low-income customers through both the utility portfolio and Comfort Partners. Comfort Partners is a state-run program that provides efficiency measures for residents at no cost. Utilities run programs that look to serve 

customers that are not eligible for Comfort Partners. To provide high-level direction to these programs, a formal goal for spending or savings in low-income communities would help align programs with equity priorities for the state. This can be done through creation of a savings goal or spending target for programs, both of which require a minimum level of benefits flowing to underserved communities. A performance incentive mechanism (PIM) is currently proposed for equity, which provides helpful direction. But dedicated, separate savings targets can ensure program administrators prioritize equity from the start. Additionally, the state could coordinate implementation of both Comfort Partners and utility programs to enhance building decarbonization offerings in Comfort Partners. Comfort Partners is fuel neutral, leveraging utility dollars to cover gaps in program funding. The state could support homes with delivered fuels or electric resistance to adopt efficient heat pumps, saving money, energy, and emissions.

With Proposed Lower Budgets, Closer Scrutiny on Savings Will Be Needed to Ensure Bill Savings and Other Benefits
Energy efficiency programs are critical to improving energy affordability because they lower overall energy consumption, saving money both for participants and all ratepayers. NJBPU proposes to lower budgets from Triennium 2 to Triennium 3 from $3.8 billion to $2.2 billion in Triennium 3 (see table below) but plans to achieve similar levels of savings (with a proposed change in the metrics used from net to gross savings). The Straw Proposal identifies areas for budget reduction including guidance on incentives offerings, changes to the utility loan programs, and changes to how utilities are compensated for energy efficiency investments and achievements.  However, a significant reduction in budgets poses risks to the overall savings achievements for the program. While it is critical to ensure ratepayer funding is spent prudently, significant budget cuts could risk a lowering of overall savings and benefits to ratepayers from these programs.

*Note: These savings targets represent utility program achievements; state-led programs would achieve additional savings

Proposed Changes to the Utility Cost Recovery Model
The Triennium 3 Straw Proposal acknowledges that the incentives available to utilities have been highly successful in prioritizing investments in energy efficiency. However, for Triennium 3, NJBPU proposes changes to reduce these incentives to ensure ratepayer funds are spent prudently. NJBPU proposes several ways to accomplish these goals. These would include changes to how utilities can earn recovery on lost revenue from efficiency, the investment treatment for how and at what levels utilities can earn performance incentives, and potentially by setting rate caps for Triennium 3 cost recovery if the Board determines it in the public interest. We are taking a closer look at these and related proposals. It is critical to ensure that Triennium 3 fully values energy efficiency and demand flexibility as lost-cost resources to the system, with adequate cost recovery treatment that enables utilities to earn a return on investment and push for higher program performance.

Conclusion
NEEP is pleased to see New Jersey continue its work on energy efficiency through this Straw Proposal. Additionally, we are eager to support continued progress on energy efficiency for customer affordability, energy system reliability, and many other benefits. The Straw Proposal is an important step in the planning process as it will inform NJBPU’s program framework, which is expected to be released early next year. While there will be additional opportunities for engagement, it is important for stakeholders to weigh in now. Comments for the Straw Proposal are due December 26th.