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Clean Energy Surcharge to Remain Flat, Despite Diversion of Funds

BPU assertion should be welcome news to residential customers and could be a very big deal for state's largest users of electricity and gas

clean energy lightbulb

Even with the diversion of tens of millions of dollars in clean energy funds, the state does not plan to raise a surcharge that pays for it and other utility-related programs.

At least that is what the staff of the New Jersey Board of Public Utilities told the Office of Legislative Services in a , a bit of good news for electric and gas customers who pays some of the highest energy bills in the nation.

Even keeping the surcharge (known as the Societal Benefit Charge) level, the staff said it should be sufficient, combined with anticipated carryover, to continue all existing programs to meet market demand.

That, however, presumably assumes that the Christie administration does not redirect any unspent money to help plug a roughly $807 million new hole in the state budget that needs to be closed by the end of June.

Already, the administration is “lapsing’’ another $117.4 million from the clean energy program in unspent dollars from the current fiscal 2014 budget and proposed fiscal 2015 budget. Since 2008, nearly $1 billion in ratepayer funds have been diverted to the general fund by the Corzine and Christie administrations.

In next year’s proposed budget, the Christie administration intends to divert -- with legislative approval -- $68 million. Most of that would be used to pay for state utility costs ($42 million); NJ Transit utility costs ($12.9 million); state energy efficiency projects ($9.2 million); and the Office of Sustainability and Green Energy at the state Department of Environmental Protection ($3.7 million).

The clean energy program funds a wide variety of initiatives aimed at helping the state develop cleaner sources of energy, such as wind, and to promote ways to reduce electric and gas use through a range of energy efficiency programs, such as helping pay for more energy efficient appliances. It also is now looking at helping develop more energy efficient power plants, which produce electricity and heat simultaneously. Those facilities, called combined heat and power (CHP) plants, are viewed by officials as a way of hardening the grid in the event of future extreme storms, such as Hurricane Sandy.

Still, some want to see the state reduce the surcharge, a policy generally endorsed by the Christie administration.

It is a contentious issue not just among residential customers, but even more so for commercial and industrial customers, who pay most of the program costs. Three years ago, the costs to ratepayers ran $792.3 million, according to the OLS.

For residential customers, depending upon the utility, the charges ranged from about $45 to $68 annually on their electric bills in April 2013 to between $63 and $83 on their gas bills. For bigger customers, the charges can run into the tens of thousands of dollars -- and much more for the largest electricity users, sometimes accounting for up to a million dollars in additional energy costs.

In the current fiscal year, the agency projects that it will spend $191.6 million on its clean energy program, although that could rise in the fiscal 2015 budget to $235 million.

The other major program funded by the surcharge is a low-income energy assistance program designed to ensure those householders or renters dedicate no more than 6 percent of their income to paying utility bills. In recent years, the cost of the program has run around $200 million. Smaller components of the surcharge are used to pay for cleanup of contaminated gas manufacturing sites, allowing utilities to recover uncollected bills, and decommissioning nuclear plants.

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