On his 55th birthday, Scott Schultz showed up at an Iselin office at 8 a.m.on a stormy Monday to file some applications for New Jersey's Clean Energy program. There were already more than 20 people there, some of whom had camped overnight.
They were there because the Christie administration had diverted more than $400 million in funds from clean energy programs to balance the state budget. That led many small solar businesses to question whether there would be enough funding to finance their projects, which rely on rebates to fund financing packages that convince residents and businesses to install solar panels.
By the end of the day, they were proved prescient. The state had received more than 1,000 applications, exhausting the $7.5 million in funding earmarked for the program's next three months in a single day.
“I got my applications in, but it doesn’t mean they will be funded. What they did was create a rush in the marketplace," said Schultz, who works for Advanced Solar Products in Flemington.
The state announced this week it will not accept new requests until September, throwing a portion of the solar energy market into turmoil. "We got the program fixed and back on track about two years ago,'' Schultz said. Because of the diversion of funds, the state Office of Clean Energy had to scale back New Jersey's aggressive clean energy and energy efficiency programs.
The administration's cuts also led to the elimination of 29 energy efficiency and renewable energy programs run by the office, according to a lawsuit challenging the diversion of funds from a trade group representing solar power dealers. The group is contesting the administration's diversion of $158 million in clean energy funds to help plug a hole in the current state budget.
The Mid-Atlantic Solar Energy Industries Association filed the lawsuit in the appellate division in Trenton seeking to prevent the funds from being allocated for general budget purposes, arguing the money was dedicated by legislative statue to fund energy efficiency programs and renewable energy projects.
The administration has redirected more than $400 million in various clean energy funds, including the $158 million cited in the lawsuit, steps that have angered clean energy advocates and lawmakers alike. The cuts forced the state to temporarily shut down the rebate program for solar dealers, who mostly cater to residents and small businesses.. When it reopened earlier this month, it exhausted all of the money slotted for the quarter in that same day.
“There’s panic in the streets,’’ said Lyle Rawlings, president of Advanced Solar Products in Flemington and president of the trade group. It was evident when the Office of Clean Energy opened the program up for new applications on May 3 at Conservation Services Group offices in Iselin. “People were waiting up to four hours and some of them didn’t get approval,'' he said.
Solar energy advocates were pushing for more money for the rebate program at a meeting with Michael Winka, director of the Office of Clean Energy on Tuesday, but Winka told them they could not expect the budget to be increased given the state's budgetary problems, according to people who participated in the discussion.
It also revived questions about the state’s policies dealing with solar energy, according to Matt Elliott, clean energy advocate for Environment New Jersey. “The Governor has created uncertainty in New Jersey’s successful clean energy market, causing solar companies and efficiencies contractors to question its commitment to clean energy," he said.
Dolores Phillips, executive director of the solar energy trade group, said the cuts would particularly hurt small businesses that install solar panels on homes and businesses because their model relies on rebates and not financial instruments known as solar renewable energy credits (SRECs). Other aspects of the state solar program continue to thrive because larger solar vendors successfully created profitable businesses based on SRECs, which are selling for more than $600 on the spot market. They are more attractive to large businesses and manufacturers who can more easily find the capital to finance the projects.
Neither Rawlings nor Schultz would talk about the lawsuit, which argues the governor and legislature have no right to appropriate $158 million in clean energy funds because the money is raised by a special surcharge on utility bills called the societal benefits charge. The suit, filed by the Princeton law firm Potter & Dickson, argues there is no role for either the governor or the legislature in setting the levels of clean energy funding because a law deregulating the energy industry passed in 1999 specifically delegated that job to the state Board of Public Utilities.
“It is also no minor matter that utility ratepayers who think their SBC payments are helping to achieve public policy goals, such as energy conservation, are now being deceived, as a significant portion of those payments is now just another tax that goes into the general fund," the lawsuit said.
The Governor issued the executive order (#14) on Feb. 11, saying the state was “confronting an unprecedented financial crisis affecting all levels of government," including the state, which faced a shortfall of $2.2 billion in the current fiscal year that ends June 30. Michael Drewniak, the Governor’s press secretary, declined comment when asked about the lawsuit.
The administration already has suffered one setback on a series of executive orders issued by Christie since he took office. An appeals court overturned his order restricting political donations from public employee unions. The New Jersey Office of Legislative Services also has issued an opinion arguing the Governor cannot divert money from the Clean Energy Fund without legislative approval since the fund was created by statute.
That argument was echoed in the solar energy lawsuit, which claimed the Governor’s executive order would set a dangerous precedent, which could be construed to allow seizure of other statutorily dedicated funds.