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Fate of Atlantic City Wind Farm Could Rest With Feds, Not NJ

If Congress doesn't renew lucrative tax credit, Fishermen's Energy may not be able to finance offshore initiative

Daniel Cohen Fishermen's Energy
Daniel Cohen, president of Fishermen’s Energy, said he believes Congress will extend an expiring tax credit deemed crucial to his company's offshore wind project off the Jersey coast of Atlantic City.

The state will take another look late this year at a pilot offshore wind farm project proposed to be built 2.8 miles off Atlantic City, but its prospects now largely hinge on action at the federal level, and not what regulators here in New Jersey decide.

The Fishermen’s Energy offshore wind initiative has been shrouded in uncertainty for months, mostly because the state Board of Public Utilities tabled a proposed settlement this past July between the developer and New Jersey Division of Rate Counsel, which urged approval of the project.

In an announcement posted on its website yesterday, the BPU tentatively scheduled hearings on either December 19 or December 20. The agency is slated to hold its last monthly meeting of the year on December 18, making it improbable that the project could be approved prior to 2014.

That is problematic for the developer, because unless it starts spending millions of dollars on the project by the end of the year, it could potentially lose out on a lucrative federal Investment Tax Credit, which makes the project economically viable.

But Daniel Cohen, president of Fishermen’s Energy, said he believes Congress will extend the investment tax program, which expires December 31, 2013, for at least one year. “If not for that, we would be having a severe case of angina,’’ Cohen said about the planned expiration of the tax credit.

Without the tax credit, most industry observers say the project would be much too expensive for utility ratepayers, who will bear the bulk of the cost of subsidizing it.

Cohen and other advocates of the project, which involves building a pilot 25-megawatt offshore wind farm, contend that the developers have satisfied every condition required under a bill designed to promote the technology along the Jersey coast. After months of deliberation and initial opposition from the state, that view was endorsed by the New Jersey Division of Rate Counsel in a stipulated settlement reached earlier this year with the developer.

Division of Rate Counsel Director Stefanie Brand declined to say what the latest developments meant to the fate of the Fishermen’s Energy project. “At this point, it should get resolved one way or the other,’’ she said.

Chris Wissemann, chief executive officer of Fishermen’s Energy, questioned why no decision is forthcoming on its project. “It is interesting that the Department of Energy with dozens of offshore wind experts consider Fishermen’s Energy to be one of the premier developers in the country and yet the BPU doesn’t recognize New Jersey’s own homegrown leader, he said.

The BPU refused to endorse the settlement, citing questions about the financial integrity of the project and the technology proposed by the developer.

The project is tiny in comparison to an Energy Master Plan goal of building 1,100 megawatts of offshore wind capacity by 2020, a target Gov. Chris Christie has often touted. Still, the uncertainty around the Atlantic City project is seen by some legislators and clean energy advocates as reason to question the Christie administration’s commitment to offshore wind.

With expectations the governor will make a presidential bid in 2016, some critics privately speculate that Christie does not want to see offshore wind projects proceed with state subsidies, a policy not supported by the conservative wing of the Republican party.

For those critics, the administration’s actions speak louder than words. The BPU has yet to implement rules that would set up a financing mechanism to enable offshore wind developers to line up necessary funding from Wall Street.

Jeff Tittel, director of the New Jersey Sierra Club, argued the BPU is delaying the project by scheduling a hearing late in the year so the agency can blame its demise on the expiration of the investment tax credit.

“It gives them the excuse to kill the project,’’ said Tittel, without taking a vote on whether it should proceed. “If they really wanted the project to proceed, they would have adopted the offshore wind rules.’’

The failure to adopt the rules also drew criticism from a prominent lawmaker, Assemblyman Upendra Chivukula (D-Somerset), the chairman of the Assembly Telecommunications and Utilities Committee.

“The failure of the BPU to implement rule-making has prevented several groundbreaking measures that were signed into law from being implemented and benefiting New Jersey ratepayers,’’ he said.

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