On January 23, 2003, both houses of the New Jersey Legislature passed Assembly Bill No. 2165 (the "Bill") and sent the Bill to the governor for signature. If the Bill becomes law, it will amend the government energy aggregation provisions of New Jersey’s Electric Discount and Energy Competition Act (P.L. 1999, c.23) ("EDECA"). In general, government energy aggregation programs are intended to reduce the price of energy by allowing customers to improve their bargaining power by pooling their energy purchases through local governments. The EDECA allows for aggregation of both electric generation and gas supply services. According to the Assembly Appropriations Committee Statement, dated September 19, 2002, the existing statutory process is too complex, with the result that "there has been no successful government aggregation of residential customers." The Bill is intended to streamline the process.

Among other things, the Bill (1) allows government aggregators to obtain certain customer information from public utilities without prior customer consent, (2) includes all residential customers in government aggregation programs unless they specifically opt-out, (3) gives local government the option of allowing non-residential customers who specifically opt-in to participate in the program, and (4) allows government aggregators to contract with more than one supplier, although each customer must receive service from only one supplier. The Bill also directs the New Jersey Board of Public Utilities to develop an alternate procedure under which local governments could obtain the assistance of public utilities in developing the aggregation program, provided that the utility would recover its costs from the local government body rather than from the utility’s ratepayers.

The procedure detailed in the Bill requires any local government body wishing to develop an energy aggregation program to adopt an ordinance or resolution that indicates its intent to solicit bids from electric generation or gas service suppliers. If the aggregation program is to include non-residential customers, such customers have thirty days from the adoption of the ordinance or resolution within which to elect to participate in the aggregation program. Due to various deadlines established in the Bill, solicitations for bids by prospective suppliers will not be issued until after the thirty-day opt-in period elapses, with the result that non-residential suppliers must make their election before the terms of the applicable supplier contract(s) are known. The governing body, however, is only allowed to accept bids where the rate is the same or lower than the price of "basic generation service," i.e. regulated, non-competitive service, subject to certain adjustments based on the cost of compliance with renewable energy portfolio standards. It is unclear whether prospective suppliers would know the extent of non-residential customer participation before submitting their bids.

After contracting with the chosen supplier(s), the governing body is required to provide residential customers thirty days notice within which to opt-out of the aggregation program. The notice is to provide price and other information for use in comparing the aggregation program with other alternatives. Thus, unlike non-residential customers, residential customers will know the essential terms of their participation in the aggregation program before making an election. Although participation on an opt-out basis rather than an opt-in basis would presumably increase the number of residential customers who participate in the program, there would be no way for prospective suppliers to know the extent of residential customer participation before submitting their bids.