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Towns, Hospitals and Multifamily Rentals Could Benefit from PSE&G Energy Efficiency Program

Utility seeks Board of Public Utilities approval for $105 million project to help customers cut their energy use.

After customers lined up to participate in a recent energy efficiency program, Public Service Electric & Gas (PSE&G) is seeking approval to roll out a new phase of an economic stimulus project to help towns, hospitals and multifamily housing rental units cut their energy use.

The $105.2 million proposal, the subject of a new proceeding yet to be scheduled by the state Board of Public Utilities (BPU), aims to build upon a successful energy efficiency program initiated under the Corzine administration. Its goal is to pump money into the state’s economy by accelerating infrastructure improvements by New Jersey utilities.

In briefs filed with the BPU, the state’s largest electric and gas utility said the 24-month long project also could help reduce greenhouse gas emissions and assist New Jersey in achieving aggressive targets for cutting energy consumption by 20 percent by 2020.

A Modest Proposal

If approved by the agency, the program would be financed by a very modest increase in the bills for the utility’s 1.7 million gas customers and 2.1 million electric customers. Gas bills for the typical residential ratepayer would increase by $1.08 year; electric bills, by 96 cents.

In proposing the program, the utility, which did not respond to calls for comment, suggested it would focus its energy efficiency projects on the three programs that generated the greatest response of the eight categories it offered several years ago.

Under its proposal, $20 million would be set aside for projects involving multifamily rentals with five or more units; $25 million would be allocated to municipal government projects; and $50 million would go to hospitals to help reduce their energy costs. The remainder of the money would go to administering the program.

Coming Up with the Capital

With the recession and constrained budgets, each target category is finding it difficult to come up with the capital to invest in projects to reduce energy consumption.

That is especially true for hospitals, some of which have gone bankrupt in the past few years, the brief noted. Medical facilities use huge amounts of energy, so much so that a fund had been set aside to help hospitals build on-site power plants, which generate electricity and steam simultaneously. That money, however, was diverted last year by the Christie administration to help plug the budget gap.

In its brief, PSE&G noted it has funded 20 energy efficiency projects at hospitals, with another 23 facilities on a waiting list. "The current economic environment also contributes to the hospital sector’s general lack for infrastructure improvements," said Robin Elaine Bryant, manager of market strategy and policy for the utility in the brief.

Typically, in these projects, the utility fronts the money to do the retrofits of lighting, space heating and other work and the money is repaid by the customer on its utility bill, with payback generally taking eight years or less.

"The hospitals desperately need funding," agreed Steve Goldenberg, an attorney for companies that use large amounts of energy. "PSE&G’s program demonstrated in the past it deserves to go forward. There were a lot of hospitals seeking to participate. It’s a very good idea."

Twenty million dollars of the money would be allocated to helping cut energy use in multifamily rental units, an effort that would target energy efficiency projects to households that typically do not have the cash to undertake efficiency efforts on their own. The utility noted that 71 percent of rental households earn less than $40,000 a year, according to its brief.

Multifamily rentals would pay back the utility under a program similar to a zero-percent-interest loan.

While the Division of Rate Counsel has yet to formulate a position on the proposal, Stefanie Brand, its director, said as a general proposition, the agency has been supportive of energy efficiency programs in the past.

"Energy efficiency in older urban dwellings is as good as it gets in terms of cost-effectiveness," Brand said, speaking of the effort to reduce energy use in multifamily units. "You are focusing on the people who are suffering the most from the recession."

Brand also said municipalities ought to be looking at how they can reduce their energy costs, especially given they are now facing constraints from budget caps. The payback for municipalities also would be at zero percent.

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