Bill Would Allow Oil Customers to Tap Clean Energy Fund

With more than $400 million already diverted from the fund, proposal to extend benefits sparks dispute

The state’s clean energy fund is severely depleted, but lawmakers may expand the program to allow users of heating oil to tap into the fund to make their furnaces more energy efficient.

The proposal, which aims to allow home heating oil customers to take advantage of financial incentives to reduce energy use, has caused a divide among interest groups usually on the same side of an issue: environmentalists and the New Jersey Division of Rate Counsel.

The dispute revolves around use of funds raised by the so-called societal benefits charge (SBC), a small surcharge amounting to roughly 3 percent of a residential customer’s gas and electric bill. While not a big surcharge for homeowners, the fee does raise a significant amount of money, totaling $740 million last year, about 40 percent of which is deposited in New Jersey’s clean energy fund.

Home heating oil advocates have long pushed for the ability of their customers to obtain access to energy-efficiency funds to upgrade their furnaces, and this year they convinced Sen. Robert Smith (D-Middlesex) and Sen. Joseph Kyrillos (R-Monmouth) to sponsor a bill (S-466) permitting it. Since the state has adopted an energy master plan calling for a 20 percent reduction in energy use by 2020, Smith argues it is only equitable that homeowners also be able to curb their energy use.

But Stefanie Brand, director of the state Division of Rate Counsel, opposes the bill, saying it is both inequitable and unworkable.

“For the first time, it would require use of these funds for programs unrelated to the electric and gas customers who pay the charge,” Brand said. The bill includes no provision to add a societal benefits charge to home heating bills, but merely requires electric and gas customers to subsidize the cost of energy-efficiency programs for home heating oil customers, she added.

The argument failed to sway Smith. “Show me a home heating customer who doesn’t use electricity,” he said. “There’s nothing in this bill that increases rates.”

The controversy erupts at a time when the Christie administration has diverted more than $400 million in clean energy funds to help plug a hole in the state budget. The diversion already led the state Board of Public Utilities to scale back some of its energy-efficiency and renewable-energy projects, a move that could be repeated if the program is expanded, according to some utility officials.

“Do we want everyone to do energy efficiency? Absolutely,” said Karen Alexander, president and chief executive officer of the New Jersey Utilities Association, an industry trade group. “It’s a pot of money that is finite. If we have more people drawing down on that pot of money, other people will get less.”

Jeff Tittel, executive director of the New Jersey Sierra Club, argues that home heating oil customers ought to share in the benefits of the energy efficiency programs, which offer rebates and other incentives to homeowners to convert furnaces to use energy more efficiently.

“There are many areas in the state where customers cannot hook up to natural gas lines,” he said. “This is an important incentive for them to go to cleaner burning furnaces, which will result in less pollution and less greenhouse gas emissions.”

Smith agreed. “These people should not be discriminated against,” he said. “The bottom line is our energy master plan calls for us to reduce our carbon footprint and this will help us to achieve that goal.”

The legislation is expected to be taken up by the Senate before lawmakers break for their summer recess in July.

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