The Cost of Climate Pollution

New Jersey Uses SCC in Cost Test for Energy Efficiency and Demand Reduction Programs

eNew Jersey Electric Power Sector August 2020

• Application

  Benefit-to-Cost Ratio Test

• Date

  August 2020

• Details

  New Jersey's Clean Energy Act of 2018 requires that energy efficiency and peak demand reduction programs have a benefit-to-cost ratio greater than 1, "considering both economic and environmental factors." Accordingly, the New Jersey Board of Public Utilities Staff developed a cost test methodology for such programs. Among the "non-energy impacts" to be included in the cost test is the value of avoided emissions, which Staff defined as "Calculated for electric and natural gas using the 3% discount rate “Annual SC-CO,'D” adjusted for today's dollars, as published in the 2016 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis by the Interagency Working Group on Social Cost of Greenhouse Gases." Staff's recommendations were adopted August 2020.

• SCC Value(s)

  Based on IWG's SCC at the 3% discount rate

• Reference

  New Jersey Board of Regulatory Commissioners, Order Adopting the First New Jersey Cost Test (August 24, 2020)

• Legal Authority

  N.J.Stat. Ann. 48:3-87.9(d)(2)

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