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Your Clean Energy Funds at Work

Tom Johnson | June 14, 2011

Gov. Christie diverted $42.5 million in clean energy funds to keep the lights on in Trenton, and another $160 million to help balance the budget. Some powerful Democrats have had enough.

Every time you sit down and write a monthly check for the electricity and gas delivered to your home or business, a portion of that money goes to pay the costs of providing energy to New Jersey’s state government buildings.

Last year, the Christie administration and the legislature approved siphoning $42.5 million in clean energy funds financed by utility ratepayers to cover the energy bills run up at state facilities, a tactic Gov. Chris Christie is proposing to repeat again this year by tapping the same clean energy fund for another $42.5 million.

The Republican Governor is not the first to raid the fund, financed by a surcharge on customers' gas and electric bills that comes to about $5 a month for a typical homeowner. None, however, have done so this often, and to this extent.

Besides dipping into the clean energy fund to pay state energy bills, Christie scooped up another $158 million from the fund to help balance the budget. He also diverted $128 million from another utility-financed program, which is funded by surcharges on businesses that fail to shop for new electricity suppliers, again to balance the budget. His budget-balancing act also included stripping away $65 million in funds raised by a regional initiative to curb global climate change, funds that would otherwise have been set aside for clean energy projects.

A Hidden Tax

In each of these cases, lawmakers, for the most part, went along. Apparently not anymore, though: Now they call it a hidden tax on the people of New Jersey, aiming to protect the funds from future raids.

Such maneuvers would be barred under a proposed constitutional amendment introduced yesterday by a trio of influential Democratic lawmakers, which would dedicate money raised for a clean energy fund to be used solely for that purpose. They hope to get the bills passed by July 1, according to two of the legislators, Assemblyman Upendra Chivukula (D-Somerset) and Assemblyman John McKeon (D-Essex), the chairmen of the two environmental committees in the lower house. Identical bills are expected to be sponsored by Sen. Bob Smith (D-Middlesex), the chairman of the Senate Environment and Energy Committee.

Christie’s announcement last month that he would pull out of a regional initiative to reduce greenhouse gases seems to be the trigger for Democrats and clean energy advocates to push back against the governor. Christie probably did not help his cause last week when he unveiled a new Energy Master Plan (EMP), which retained the 22.5 percent goal for the state’s renewable energy portfolio standard, but abandoned a much more popular -- at least among clean energy advocates -- 30 percent renewable energy goal by 2020 suggested in the previous plan.

Trouble Ahead

It all seems to spell trouble for many of the Governor’s initiatives outlined in the EMP, proposals that include a goal to shrink the main funding source of the clean energy program, a so-called societal benefits charge (SBC), to zero. Not only is the fund the main source to finance energy efficiency projects and promote renewable energy, but also it also provides the money to allow low-income households to pay their energy bills.

It also is not cheap. With the economic slump, the cost of the program has skyrocketed because it ensures certain low-income households pay no more than 6 percent of their income on energy bills. More than 200,000 households are enrolled in the energy assistance program, which will cost $215 million this year. That exceeds the $154 million the state wants to spend on clean energy programs in the coming year.

Noting the success of the clean energy and low-income energy assistance programs, McKeon asked, "How could you reasonably argue the source of the funding should be shrunk?"

In the Governor’s press conference unveiling the revised master plan, Board of Public Utilities (BPU) President Lee Solomon suggested the societal benefit charge could eventually be shrunk to "zero," and replaced with a revolving loan fund, similar to the one the state uses to pay for wastewater treatment projects, without providing much details.

The news alarmed consumer advocates. "To me, it sounds like it would be devastating," said Phyllis Salowe-Kaye, executive director of the New Jersey Citizen Action. "It would be problematic any money would ever get to those who need it."

The Business Perspective

Business lobbyists had a different view. They have long argued the SBC charge falls most heavily on businesses that rely on huge amounts of energy to operate, often without any benefits in return. Some businesses pay in excess of $1 million annually just in SBC charges.

"Things like this, honestly, should come out of the general fund," said Michael Egenton, a top lobbyist for the New Jersey State Chamber of Commerce. "Companies cannot afford it anymore," he said.

All of these issues emerged yesterday as the Assembly Telecommunications and Utilities Committee explored the administration’s decision to pull out of the Regional Greenhouse Gas Initiative (RGGI), a move administration officials described as a way to lower energy costs to consumers and businesses.

That argument triggered a harsh reaction from Chivukula and others, who noted it costs the average household $3.24 a year. "This is not the cause of high energy prices," he said.

Ray Cantor, a special advisor to Department of Environmental Protection (DEP) Commissioner Bob Martin, defended the withdrawal from the regional initiative, repeatedly saying the program was not reducing greenhouse gas emissions and was simply a tax that is unnecessary to meet the state’s goals for reducing pollution contributing to global climate change.

After the committee hearing, Chivukula and McKeon announced they would sponsor legislation to keep New Jersey in RGGI, even acknowledging it faces a veto from the governor. "We just need to keep the pressure up," McKeon said.

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