December 31, 2023 marks the final deadline for compliance with the first year of New Jersey’s building energy and water benchmarking law. The New Jersey Board of Public Utilities (NJBPU) issued an order in compliance with the New Jersey Clean Energy Act of 2018 requiring the owners and operators of commercial and certain multi-family residential buildings equal to or greater than 25,000 square feet to benchmark their energy and water usage for the past calendar year using the U.S. Environmental Protection Agency’s Energy Star Portfolio Manager tool. Covered properties were notified on July 1, 2023 and had until October 1, 2023 to comply, with a ninety-day grace period that ends on December 31, 2023.

The program relies on state tax classifications to define which properties are covered. Covered properties include Class 4A commercial buildings or any type of income-producing property and Class 4C apartments designed for use by five or more families. The benchmarking requirement excludes facilities that are classified elsewhere in the tax code, such as shopping centers, malls, office buildings, restaurants, theaters, assisted living facilities, and industrial properties.

New Jersey’s benchmarking requirement does not authorize the assessment of fines for non-compliance but does make compliance a prerequisite for participation in any of the NJBPU’s other programs, including utility energy efficiency programs. The NJBPU will first send a warning letter to non-compliant covered buildings. If buildings still fail to comply by the warning letter deadline, then the NJBPU will include the building’s non-compliance status in a building-level database.

The concept of benchmarking is nothing new and in fact has become “standard operating procedure” as regulating energy usage becomes an increasingly pressing issue for governments across the United States. Washington, D.C. led the charge in 2008 by passing the Clean and Affordable Energy Act of 2008, with New York City following in 2009 by enactment of its Greener, Greater Buildings Plan (Local Law 84 of 2009). Since then, countless jurisdictions at the state and local levels have enacted similar requirements.

The goal of benchmarking is three-fold: (1) collect data to inform property owners about their buildings’ energy usage, (2) reduce building-level energy consumption and emissions, and (3) provide a foundation on which to develop viable legislative emissions reductions targets. Indeed, former NJBPU President Joseph L. Fiordaliso announced the benchmarking requirement as “the next important step in implementing a best in class, statewide, energy efficiency program which will help us achieve Governor Murphy’s goal of 100 percent clean energy by 2050. Creating a system of benchmarking allows us to measure the use of energy (electricity and gas) and water by the state’s biggest buildings and support building owners in reducing energy and water usage and operating costs.”

Along similar lines, New York City has used Local Law 84 benchmarking data to inform the development and implementation of its building energy grade law (Local Law 95 of 2019) and landmark building emissions law (Local Law 97 of 2019). The New York State Climate Action Council, tasked with informing implementation of the State’s Climate Leadership and Community Protection Act (CLCPA), has recommended the creation of a statewide energy benchmarking program for multifamily and commercial properties larger than 10,000 square feet. New Jersey clearly has similar goals for its clean energy program and this latest requirement gets the state one step closer to achieving a clean energy future.

For more information about this requirement or other energy benchmarking requirements, please contact Alexis Saba and/or Nika Sabasteanski.