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State May Slash Clean Energy Fund Almost by Half

Tom Johnson | July 25, 2012

Cuts will affect wide range of programs, but will also give legislators and administration far less money to divert.

The state is considering cutting its funding for new energy efficiency and renewable energy projects almost in half, a consequence of the Legislature’s and Christie administration’s decision to divert hundreds of millions of dollars from New Jersey's clean energy program.

In a draft proposal circulated by the New Jersey Board of Public Utilities last week, the budget for the clean energy program would allocate $339 million in new spending, a sharp reduction from the $651 million proposed by the agency last December.

The cuts are a result of the diversion of money raised from gas and electric customers to help homeowners and businesses find ways to reduce their energy use, and promote the development of cleaner sources of producing electricity, primarily solar and wind.

The clean energy fund has helped propel New Jersey to be a leader in promoting clean energy, a status underscored by the fact that is second only to California in the number of solar installations.

Besides promoting solar, the fund has helped homeowners reduce their energy bills by providing rebates to buy energy efficient refrigerators and furnaces; businesses cut their electric bills by installing more efficient lighting; and local governments to reduce their energy use by paying for energy audits.

This year, the Christie administration and lawmakers diverted $200 million from the state’s Clean Energy Fund to plug a hole in last year’s state budget, which ended this past June. In addition, they are using another $79 million from the fund, which is financed by a surcharge on most customers’ gas and electric bills, for next year’s state budget.

In allocating revisions to the original budget approved by the BPU, the New Jersey Office of Clean Energy sought to keep all programs intact, albeit at lower funding levels, according to Michael Winka, director of the office.

Nevertheless, clean energy advocates said the cuts will set back the state’s efforts to reduce energy use and promote renewable energy.

“It will have an enormous impact. It is certainly going to cut it in half," said Lyle Rawlings, president of Advanced Solar Products, and founder of the Mid-Atlantic Solar Energy Industries Association.

“It’s devastating," agreed Jeff Tittel, director of the New Jersey Sierra Club. “Everyone is getting cut drastically -- even EDA [the state Economic Development Authority]. The EDA funds clean energy projects under a joint program with the BPU. Its initial budget under the program amounted to $107 million, which has been trimmed to $81 million with carryover funding, but only $75 million is in new spending programs."

“These programs are widely used," Tittel said. “It’s created a lot of jobs and saved businesses a lot of money by using less energy. These cuts will have a major impact."

The clean energy surcharge -- amounting to as much as $60 a year for the typical customer of Public Service Electric & Gas to as much as $1 million annually for businesses and institutions using a lot of energy -- is an increasing contentious issue in Trenton.

A task force last year recommended the state trim back how much it raises from ratepayers to what it can spend in any fiscal year, otherwise the fund is prone to raids from lawmakers and administrations. Gov. Chris Christie is not the first executive to dip into the fund, but he has been much more aggressive than his predecessors.

Since he has taken office, Christie has tapped various clean energy funds for more than $680 million to put into the general fund. The diversions are having impacts beyond just cuts in energy efficiency and renewable energy projects.

Last week, NJ Spotlight disclosed that the state’s efforts to develop offshore wind farms have run into an unexpected problem -- fears that revenues targeted to projects for producing electricity may be diverted to cope with New Jersey’s budget problems.

In the draft proposal, energy efficiency funding for new programs would drop to $238 million from $409 million recommended this past December and renewable energy funding would fall from $59 million to $16 million for new spending.

The state is hoping to receive input from stakeholders on its draft proposal in the next few weeks and expects to present something to the five BPU commissioners by September, according to Winka.

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