In New Jersey, energy issues have emerged as a high priority for both consumers and businesses, with costs typically ranging in the top 10 most expensive in the nation. The Christie administration’s Energy Master Plan cites cutting those costs as a chief concern, in part, to make New Jersey more competitive with neighboring states.
It is a difficult dilemma. The state has a lot of congestion on its power grid, which tends to spike costs for energy users. New Jersey’s utility companies are building new transmission lines to ease that problem -- and potentially reduce congestion -- but those costs also fall on ratepayers.
What’s more, there is a vigorous debate over how much the state should rely on renewable energy and energy efficiency to provide cleaner sources of power to make sure the power grid is reliable. At this point, renewable energy sources, such as solar and wind, rely on subsidies from both the federal and state governments to make them viable, with those costs falling on taxpayers and ratepayers.
It has tried by encouraging new power plants to be built in New Jersey by awarding lucrative subsidies to three projects. Federal courts, however, blocked the proposal, passed by the Legislature and signed into law by Gov. Chris Christie. The good news is that even though the generators may not get the subsidies, two of the projects are moving forward -- and another without those incentives. The other question is how will the Federal Energy Regulatory Commission and PJM Interconnection, the operator of the nation’s largest power grid (including New Jersey) mandate new projects to maintain the reliability of the electricity system.
With millions of customers left without power during the superstorm -- some for weeks at a time -- the state is looking to build more resiliency into the power grid, both on the electric and gas utility side. For example, Public Service Electric & Gas won approval from the state Board of Public Utilities to spend $1.2 billion to upgrade its infrastructure. The issue raised by environmentalists is whether all those expenditures are necessary -- given the move to build more distributed generation systems, like solar, which provide power to customers not relying on the grid.
It is very uncertain. The law mandating the state reduce emissions that contribute to global climate change directed an 80 percent reduction in such pollution by 2050 from 2006 levels. Most of the key components to achieve that goal, according to a 2009 plan by the state Department of Environmental Protection, have yet to be implemented. For instance, the Christie administration pulled out of a regional 10-state initiative to reduce greenhouse gas emissions by imposing a tax on pollution from power plants. Other components of the strategy are New Jersey’s Energy Master Plan and the state’s low-emission vehicle program, both of which have had problems being implemented.
In a case pending more than three years, state regulators have still not determined whether JCP&L was earning above what the utility was rightfully due. The case is now before an administrative law court judge, but consumer advocates argue once a decision is reached, rates should be rolled back to last August as the New Jersey Division of Rate Counsel has argued in a petition to the state Board of Public Utilities. Both Rate Counsel and the BPU have argued for rates to be reduced by more than $200 million.
The state gets much of its electricity from its four in-state nuclear power plants, but one of them, Oyster Creek in Ocean County, is to be shut down by 2019. PSEG Power, a subsidiary of Newark-based Public Service Enterprise Group, is investigating building another nuclear unit in Salem County, where it already has three generating stations. But the cost of building a new plant is prohibitive, unless the company receives incentives from the federal government. Nuclear power plants, which produce no greenhouse-gas emissions, will help the state meet new climate-change standards adopted by the federal government.
With new sources of natural gas discovered in the Marcellus Shale formation in Pennsylvania and other states, a plethora of pipeline projects have been proposed in New Jersey. As many as eight different projects have been either approved or are under consideration. Many of the pipelines run through land set aside for preservation, which has raised heated opposition from some environmental groups. The Christie administration has generally supported the projects because it brings cheaper natural gas into the state, which has led to huge reductions in customers’ energy bills.
The Legislature is considering a bill () that would mandate 80 percent of the electricity used by consumers and businesses in New Jersey by 2050 come from renewable energy sources, such as solar and wind. The bill is very unlikely to be passed soon, but it reflects the support clean-energy initiatives have among some interest groups and legislators to back projects. Business groups and Rate Counsel, however, are opposed because those projects --funded by ratepayers -- would impose new costs on customers.
The state’s Energy Master Plan calls for building 1,100 megawatts of offshore wind capacity along the Jersey coast by 2020. No projects, however, have been yet approved -- even though many experts say the wind resources off the Jersey Shore are plentiful and its relatively shallow continental shelf makes it an ideal place to site such projects. One of the biggest stumbling blocks has been the failure of the BPU to adopt rules that would allow offshore wind developers to recover some of the costs of building those projects from ratepayers.
Most agree the best way to reduce costs to consumers for gas and electric bills is to cut their consumption by employing a variety of energy-efficiency technologies. New Jersey, however, is lagging behind other states in promoting energy efficiency. Some utilities have argued that they need to play a bigger role in the effort. Public Service Electric & Gas has proposed a $110 million plan to help hospitals, government agencies, and others reduce their energy bills.
With increased use of solar -- it was the largest installation of new generation in the country in the past year -- the utilities have to refocus their strategies to include increased use of distributed generation, facilities that provide power locally but not to the grid. That also includes energy efficiency. The changes may mean utilities no longer rely on revenue based on the electricity or gas they sell, but how they help customers cut their costs.