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Democrats and Administration Clash Over Clean Energy Subsidy

Fight over renewable targets segues into argument over ratepayer subsidies for wind and solar power.

Sen. Bob Smith (D-Middlesex), chairman of the Senate Environment and Energy Committee.

Ever since the Christie administration unveiled its draft Energy Master Plan (EMP), it has triggered a vigorous debate over how ambitious the state's renewable energy goals should be.

Yesterday, that issue took a back seat to questions as to whether New Jersey's policies supporting that effort, primarily funded by surcharges on all customers' electric and gas bills, ought to be scaled back, or, at the very least, be re-examined.

The dispute crystallized as Democratic lawmakers yesterday pressed their fight with the Christie administration over energy and environmental policies, voting along party lines to rebuke efforts by the Republican executive branch to change course on promoting renewable energy and economic development.

Renewable Requirement

By a narrow three-to-two margin, the Senate Environment and Energy Committee approved a bill (S-3032) that would require 30 percent of the state's electricity to be produced by renewable sources, such as solar and wind power. Later, by a similar vote, the panel said a proposed rule by the Department of Environmental Protection is inconsistent with legislative intent because it would allow the agency, under certain circumstances, to waive environmental regulations.

While most of the debate on the master plan has focused on various goals dealing with renewable energy, the administration and business interests opposed the bill, calling the targets unrealistic. Perhaps more importantly, they questioned whether the state should continue to raise hundreds of millions of dollars a year for an industry heavily subsidized by ratepayers.

The actions follow a string of policy disagreements between the two branches of government, over energy issues. Democrats, who control both houses of the legislature, have unsuccessfully sought to reverse an administration decision to pull out of a regional coalition to curb greenhouse gas emissions and to discourage a controversial drilling technique to extract natural gas.

Scaling Back?

Yesterday's hearing featured many of the same arguments that have revolved around the draft energy master plan released by the administration in June. Although it retained the same legislative-established 22.5 percent renewable energy goal, clean energy advocates as well as lawmakers say the plan scales back on a 30 percent goal mentioned in the last energy plan prepared by the Corzine administration.

"We believe the decrease sends all the wrong messages to the alternative energy developers in the state," said Sen. Bob Smith (D-Middlesex), the chairman of the committee and sponsor of the bill. Solar industry executives supported the higher target, suggesting it could bring stability to a market rocked by a steep drop in the price owners of solar systems earn for the power they produce.

"The solar industry is on a bit of a roller coaster ride," said Dennis Wilson, president of the Mid-Atlantic Solar Energy Association. If something is not done to stabilize prices, Wilson argued, there would be layoffs at the firms that have helped install 10,000 systems in New Jersey. He also said the state's commitment to the solar sector would at most increase ratepayer costs by 5 percent over the next 10 years, far less than what utility customers have absorbed in recent years.

The administration repeated its argument that the 30 percent goal was unrealistic, noting the 22.5 percent target was only exceeded by a few other states in the nation.

More problematic, however, were other provisions in the bill, particularly those dealing with language that would require the state to maintain 2011 funding levels for a surcharge on utility bills that helps finance clean energy programs. The surcharge, known as the societal benefits charge, (SBC) amounts to only about $5 per month on a typical customer's electric bill, but can run as much as $25,000 a year for even small manufacturers, according to Sara Bluhm, a vice president of the New Jersey Business & Industry Association.

The administration has talked about trying to eliminate the surcharge, or greatly reducing its cost, a goal that worries clean energy advocates who say it is one of the main sources of funding clean energy programs. But in written testimony to the committee, the state Board of Public Utilities (BPU) noted the budget for the clean energy program is set higher for 2012, at $379 million, than it was in 2011, when the program's budget came in at $312 million.

Division of Rate Counsel Stefanie Brand argued the provision dealing with the SBC limits any opportunity to find ways to fund the programs more efficiently. "The SBC is very, very expensive for consumers," she told the committee. Furthermore, the surcharge funds far fewer cleaner energy programs than in the past, Brand said, referring to a time when the state handed out generous rebates to promote solar energy.

Today, a big part of the ratepayer impact of promoting renewable energy is attributed to solar renewable energy certificates, which owners of the systems earn for the electricity they produce.

In the end, Smith agreed with Brand and others in the business community and removed the provision dealing with the surcharge.

Later, the committee also approved a resolution (SCR-239) declaring a proposed rule by the DEP to allow the waiver of certain rules and regulations to be inconsistent with legislative intent. The measure won support from nearly all of the state's environmental groups, who argue the waiver proposal could lead to widespread abuse.

The proposed rule, which has yet to be adopted, has garnered praise from business interests who say it adds a critical new tool to bring much needed flexibility to the state's regulatory process. The proposal, spurred by an executive order issued by Gov. Chris Christie shortly after taking office, aims to remove unreasonable impediments to economic growth as long as doing so does not compromise protections for the environment or public health, according to its backers.

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