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Reduce Energy Use, Not Cost, to Keep Businesses in New Jersey

Task force re-evaluates Master Plan to help make sure state's power meets dual criteria: reasonable costs and renewable sources.

If New Jersey is going to help struggling businesses remain in the state by reducing their energy costs, the top priority ought to be helping them reduce their energy use.

At least that seemed to be the consensus of the New Jersey Energy Master Plan Policy Task Force, a group helping the Christie administration re-evaluate the state’s blueprint for ensuring it produces energy at a reasonable cost to ratepayers while moving ahead with cleaner sources of electricity.

The reassessment comes at a time when policymakers, legislators and business lobbyists are questioning whether the state’s aggressive efforts to curb energy consumption and to promote solar and wind power will drive up already high energy bills in New Jersey. By 2020, the state wants to have 30 percent of its electricity produced by renewables and to reduce energy use by 20 percent.

Meeting in Trenton for its third session, the task force yesterday debated just how big a factor energy should be in the state’s efforts to retain and attract businesses in New Jersey, a state often criticized by business interests for its high energy costs.

Competitive Disadvantage

Members of the task force weighed the merits of allowing electric utilities and the Board of Public Utilities negotiate discounted electric rates with a business or manufacturer, which otherwise might close down or move out of New Jersey because the state’s high energy bills make it difficult or impossible to compete with rivals.

The state currently allows the practice, but members said the state needs to be very deliberate when it decides to allow a company to benefit from discounted rates.

"You run into a problem when you play one segment against another," said Division of Rate Counsel Director Stefanie Brand. When the state decides to hand out a preferential rate to one customer, others are going to have to pay more, Brand argued.

Steve Gabel, president of Gabel Associates, a Highlands Park energy consulting firm, noted there is not a whole lot of room for utilities in handing out the discounts because they only have control of a portion of the overall energy bill: distribution rates, or the cost of delivering the electricity to a customer, which amounts to less than one third of the bill.

Help Where It's Needed

Instead, the state should focus its efforts in helping struggling businesses reduce their energy costs through energy efficiency projects: new lighting, new heating, new motors, or new cogeneration plants that produce power and steam at the same time, Gabel said.

"If someone comes to you and says they need help, that’s where I would help them," Gabel said.

Others argued all customers need some reduction in energy bills.

"We still have to think about how we drive down the cost of energy for everyone in the state, not just the large industrial customers," said Scott Weiner, a former BPU president and now president and CEO of the Actors Fund Housing Development Corp.

Karen Alexander, president and CEO of the New Jersey Utilities Association, said it may be too late to do so because the direction of state policy is being driven by many environmental initiatives. "I think we’ve already gone down the path where we have decided that we are going to pay more," she said.

Alexander argued the state may be putting too much reliance on energy policy as a factor in economic development efforts. Noting an earlier speaker asked whether energy policy should the number one priority, second priority or third priority in having New Jersey stay competitive with other states, Alexander said, "For all I know, it’s sixteenth on the list."

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