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Unhappy with BPU, Legislature Looks to Get Offshore Wind Moving

Proposal would have offshore wind projects financed by state's four utilities, with upfront investments recovered from consumers

John Burzichelli
Assemblyman John Burzichelli (D-Gloucester)

The Legislature is trying to jumpstart offshore wind farms, a move spurred by frustration with the Christie administration’s failure to adopt regulations to make it happen in New Jersey.

A bill (A-4538) introduced last Thursday by the deputy speaker of the Assembly John Burzichelli (D-Gloucester) proposes to have offshore wind projects financed by the state’s four electric utilities, which would recover the money from consumers -- and then some.

The legislation comes at a time when the state Board of Public Utilities has come under increasing criticism for not adopting a financing mechanism to promote offshore wind farms along the Jersey coast, a goal once strongly supported by both the Legislature and the Christie administration.

Without such a mechanism, offshore wind farms will never happen in New Jersey, according to industry experts. The BPU was supposed to adopt regulations detailing how offshore wind developers would be paid for the electricity produced by their turbines by March 2011, but still has not done so.

“The intent is pretty clear,’’ said Burzichelli, the sponsor of the bill, adding that he is frustrated by the delays in moving the projects forward. “It’s to get something started. It sends a clear message to figure out how to get it done.’’

The Legislature first passed a bill aimed at promoting the development of offshore wind farms in 2010. At the time, the measure was viewed by many as vaulting New Jersey into the forefront of states along the Eastern Seaboard seeking to establish a greener way of producing electricity. And by luring manufacturers associated with the sector to New Jersey, it was also thought to be a harbinger of a robust, green economy.

It has not happened, largely because offshore wind developers and the BPU have been unable to agree on a mechanism that would allow the projects to attract Wall Street financing. Under the original proposal, the wind farms would be awarded so-called Offshore Renewable Energy Credits (ORECs) at a price yet to be determined for the electricity their turbines produce. As with Burzichelli’s bill, the cost ultimately would fall on utility customers.

Part of the Plan

Offshore wind development is a cornerstone of the state’s Energy Master Plan, which recommends that New Jersey develop 1,100 megawatts of capacity off the coast by 2020, a target that is unlikely to be met, because of delays at the state and federal levels.

It is unclear whether the latest legislative initiative will help get any closer to the goal. At least one offshore wind developer, Offshore MW, considers the general concept of the bill “workable,’’ according to Erich Stephens, a vice president of the company.

“It’s all good intentions and we like the concept, but we would like to see some changes,’’ he said, mentioning both technical and substantive issues. “If there are changes to the bill to correct the technical details, then, yes I would think it would be helpful.’’

Burzichelli said the bill is far from being finished, adding that amendments already have been drafted to address concerns from some of the stakeholders. He blamed the problem on the BPU. “The agency is not functioning well in today’s environment of deregulation and renewable energy,’’ he said.

What others think about the bill has yet to emerge. The BPU does not comment on pending legislation, according to Greg Reinert, a spokesman for the agency. The New Jersey Utilities Association, a trade group representing the state’s utilities, has yet to take a position on the bill, according to Andrew Hendry, president and CEO of the organization.

Division of Rate Counsel Director Stefanie Brand said her office, which represents the interests of ratepayers, wants to take a closer look at the bill to see if it complies with the original legislation as enacted into law. That bill requires any offshore wind project to provide a net economic benefit to utility customers.

Brand, however, is concerned about a provision in the bill that would provide a 2.75 percent commission to utilities for financing the program. “Depending on the size of the program, it could be a very big commission that exceeds their costs,’’ Brand said.

Others privately question whether the Christie administration is shelving plans to spur offshore wind development because the policy would not play well in Republican presidential primaries in 2016.

The only offshore wind farm application now under consideration -- a pilot project about three miles from Atlantic City, is opposed by the BPU. Hearings on the proposal are scheduled to begin December 20.

“The concern is the administration has been dragging its feet on offshore wind. Whether you like this bill or not, will the BPU actually write the rules?’’ asked Jeff Tittel, director of the New Jersey Sierra Club. “It’s really about what the administration is willing to do, not what the Legislature does.’’

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