NJ Phase 1 Study: Transparency, Not Transformation

Research evidence excerpt

NJ Phase 1 Study: Transparency, Not Transformation

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US Power & Utilities

NJ Phase 1 Study: Transparency, Not

Transformation

Industry Overview

Substantial Reform Already Reflected in Valuations 17 July 2026

We do not view the NJBPU’s Phase 1 affordability study as materially changing the Equity

investment debate around New Jersey utilities. While the report outlines a broad range United States

of potential policy options, it stops short of recommending specific reforms, quantifying Utilities

bill savings, or establishing an implementation roadmap. As a result, we believe much of Ross Fowler, CFA

the regulatory uncertainty highlighted in the study was already well understood by Research Analyst

investors. We believe a regulatory change is already largely reflected in the valuations of BofAS+1 646 855 1506

the more NJ-exposed utilities In contrast, we believe similar affordability-related ross.fowler@bofa.com

regulatory risks remain less reflected in valuations of utilities exposed to Indiana We Rinny Singh

Research Analyst

believe the valuation overhang could last until Phase 2. BofAS

+1 646 855 5729

Affordability Concerns Extend Beyond Utility Returns rinny.singh@bofa.com

F. Paul Cole

While investor attention has focused on the discussion of ROEs and capital structure on Research Analyst

page 77, we believe the report takes a more balanced view than the market reaction BofAS

+1 646 743 2122

implies. ROE reform is only one of several potential affordability tools considered, and paul.cole2@bofa.com

New Jersey does not appear to be an ROE outlier relative to peers (Exhibit 3). The report Nicolas Woods

also acknowledges that rising customer bills stem from multiple drivers, including Research Analyst BofAS