Explainer: What It Really Takes to Keep the Lights On in the Garden State
Aging power plants, pipelines blocked from crossing protected land, financing schemes that won't fly -- it's not just a matter of throwing a switch
In the past few years, New Jersey has taken steps to ensure that the power grid will provide enough electricity to residents and businesses. The state approved incentives to encourage new natural gas-fired power plants and gave the green light to transmission projects to import electricity from other states. It also has backed the use of renewable energy as an alternative way of producing power -- although some environmentalists and clean-energy advocates question whether those efforts are enough.
With all that, however, the state still has issues it needs to deal with to maintain reliability, a function that mostly rests with the operator of the regional power grid, PJM Interconnection, an organization New Jersey occasionally has battled. Most of the problems faced by the state revolve around the retirement of old power plants and what the state is going to do to replace those systems, particularly in South Jersey where the situation is most acute. Here's a quick assessment of the current state of affairs:
Oyster Creek nuclear generating station: The nation’s oldest commercial nuclear power plant provides electricity to 600,000 customers, but it will be retired at the end of 2019 under an agreement the plant’s owner, Exelon, signed with the Christie administration. So far, there are no plans for how the power from the 645-megawatt facility in Lacey Township in Ocean County will be replaced.
B.L. England plant: The company's former coal-fired plant is scheduled to shut down under a consent degree with the New Jersey Department of Environmental Protection. Its new owners want to convert the Cape May County facility to run on natural gas, but need a new pipeline into the plant to carry the fuel. So far, a proposal to build a pipeline has been blocked by the New Jersey Pinelands Commission because the current route would run through the heart of the region’s 1.1 million protected acres.
New transmission lines: PJM is pushing several projects in New Jersey to ease congestion on the power grid -- which would reduce costs to electric customers and alleviate potential reliability problems in the future. Last month, the grid operator identified $150 million worth of transmission projects the local utility, Atlantic City Electric, would have to undertake if the B.L. England plant shuts down. The state’s largest utility, Public Service Electric & Gas, expects to spend $10 billion over the next five years upgrading its transmission system. But building a new transmission line -- even along existing routes -- is an increasingly tough proposition in the nation’s most densely populated state.
Are new nuclear plants the answer? Not likely. The economics of building new plants is prohibitive at this time, unless the developer can secure long-term power-purchase agreements and generous incentives from the federal government. PSEG Power, a subsidiary of the Newark-based Public Service Enterprise Group, has spent tens of millions of dollars assessing the possibility of building a fourth nuclear generating station at Artificial Island in South Jersey but seems to be in no hurry to pursue the project.
How about natural gas? The Christie administration is encouraging the development of new natural gas plants, including awarding ratepayer subsidies if the units are built. One of the three companies to be chosen, however, has decided not to build the facility. Meanwhile, the proposed subsidy program has been overturned in federal court.
The state’s Energy Master Plan: The EMP aims to promote a host of projects to help make New Jersey more energy efficient, but many of those programs have failed to live up to expectations. It calls for development of 1,500 megawatts of so-called combined heat and power (CHP) plants, which generally are more efficient than existing generating units. However, the state has failed to come up with a financing mechanism to make CHP happen on a large scale. The same is true for offshore wind farms: The state has failed to adopt rules that would allow developers to recover some of their costs from ratepayers on their utility bills.
Will growth in electricity demand level off? A tough question to answer because as utility bills rise, there has been a drop in usage in some sectors through energy-efficiency projects and distributed generation, such as solar installations. The Legislature also is exploring the possibility of enacting a program that would give utilities incentives -- without hurting their bottom lines -- to encourage customers to reduce their energy use. At the same time, there has been an explosive growth in electronic devices in homes.
What will it cost consumers? In a state with some of the nation’s highest energy costs, there is increasing pushback to many renewable energy projects and other programs relying on utility customers paying much of the freight to make them happen. That holds true even for energy efficiency programs, widely touted by most as a win-win for everyone. A proposal to establish a credit program paid by ratepayers to encourage new energy efficiency programs is stuck in legislative limbo.