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State's Clean-Energy Budget for FY2016 Holds Steady at $345 Million

Diversions continue to shunt money to other energy projects, utility bills at state institutions

energy efficiency

The state is proposing to spend $344.7 million on clean energy programs and other energy initiatives in the coming budget year -- a level that maintains expenditures from the current year.

The fund, financed by a surcharge on utility gas and electric bills, pays for a variety of programs administered by the state Board of Public Utilities. Their purpose is to promote the reduction of energy use, renewable energy, and efforts to create more resiliency in the power grid.

As in past years, money from the fund will be diverted to pay approximately $118 million for various state energy initiatives and to pay utility bills at state facilities. That would leave $216.4 million for clean-energy programs, 80 percent of which would be allocated to energy-efficiency projects at homes, businesses, and manufacturing plants.

Those diversions and others from the fund, dubbed the Societal Benefits Charge, have angered clean-energy advocates and some lawmakers who complain the money is being used to plug holes in recent state budgets. More than $1 billion has been diverted from the fund since the Christie administration took office.

The clean energy program is viewed as critical to the state’s efforts to meet aggressive renewable-energy goals and targets to reduce greenhouse gas emissions contributing to global climate change.

In the years since the state deregulated the energy sector, the nature of the program has changed dramatically. Initially, it provided rebates to homeowners and businesses to install solar systems, a program replaced by a system of giving solar renewable-energy certificates to owners of the arrays for the electricity the panels produce.

Still, the cost to utility customers has not been small. The state has collected $2.5 billion in SBC funds since the state deregulated the energy sector in 1999. In the straw proposal, BPU reiterated plans to reduce the reliance on SBC charges to customers, by establishing a revolving loan program instead.

The surcharges, which could cost residential customers who use both electricity and gas more than $100 a year, fall most heavily on businesses and institutions that use a large amount of energy. In some cases, those costs exceed more than $1 million a year -- above what they pay for the electricity and gas they use.

“We have a program that’s broken, and the SBC is a signal of that,’’ said Jeff Tittel, director of the New Jersey Sierra Club.

Under the straw proposal by the BPU, only 5.5 percent of the funding from the clean-energy program will be allocated to renewable energy. The funding priorities will include biomass (in which organic materials are converted to energy), energy storage, and offshore wind.

Whether offshore wind projects ever get approved in New Jersey remains to be seen. The BPU has failed to adopt a financing mechanism that would provide ratepayer funds to help subsidize the projects.

Other funds from the program will be used to promote more efficient power plants, which could provide electricity in extreme storms, and fuel cells, which convert energy through a chemical process. About 2.5 percent of the funds will be allocated to the BPU for administration of the clean-energy program.

The straw proposal put out by the agency last week is expected to be adopted before the next budget year begins on July 1.

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