BPU Struggles to Do More with Even Less

Facing another year of scant funding, the BPU scrambles to retool an ambitious clean energy program that had plenty of cash before the budget crisis hit

It has been a tough year for New Jersey’s clean energy program, with state officials scrambling to retool their efforts to promote energy efficiency and renewable energy in the face of steep budget cuts.

Next year isn’t looking any better.

The state is will likely have about $242 million available in the 2011 fiscal year, slightly less than the $269 million budgeted in the current year, according Michael Winka, director of the Office of Clean Energy.

With the prospect of an even tighter year, the five commissioners on the Board of Public Utilities yesterday began weighing what changes need to be made a program that was flush with money before the ballooning state budget deficits. To balance the budget, the Christie administration diverted more than $400 million in various clean energy funds this past June, a step that upset many businesses in the solar power and energy efficiency sectors.

Reining in Energy Bills

While no decisions have been made, the commissioners talked about an array of options to ensure the state remains committed to growing jobs in the green economy while mindful of the need to rein in energy bills for businesses and residents.

“Clearly one of the issues is the amount of energy costs in New Jersey,’’ said BPU President Lee Solomon, during the wide-ranging discussions at the agency’s Trenton offices in a room packed with clean energy advocates, solar businesses, utility officials and lobbyists. Solomon suggested that energy costs are having a negative impact on business and stymying attempts to promote economic growth.

The clean energy program helps finance energy conservation and renewable energy projects, particularly installing solar energy units on homes and businesses. It is critical to New Jersey’s energy master plan goals of reducing energy consumption in the state by 20 percent by 2020 and having cleaner sources of power, such as solar and wind, account for 30 percent of the electricity used by customers in 2020. The program is primarily financed by a surcharge on gas and electric customers’ utility bills.

Scrutinizing the Master Plan

The energy master plan is being reviewed for possible changes by the Christie administration, a process that is not expected to be completed until later this year. The state is trying to identify specific taxes, fees and other charges that contribute to high energy costs and detail those expenses in a meaningful way for the public, said Joseph Sullivan, the agency’s ombudsman. “Obviously clean energy is a part of those costs,’’ he said.

As part of that effort, ratepayers should end up with some kind of reduction in their bills during the transition to the clean energy program, Winka said.

In talking about the future of the program, the commissioners mulled various options, including handing administration of the program back to New Jersey’s gas and electric utilities, as was the case when the program first began nearly a decade ago. The advantage of doing that seemed to hinge on the belief that money raised from ratepayers could go to the utilities, where it would be difficult for the state to divert it for other uses, such as balancing the overall government budget.

The Money Pool

Solomon questioned whether the state should pool all of its clean energy money and clean energy businesses could bid for awards, which might be based on the best return on investment. “I get uncomfortable when we decide who are the winners and losers are,” he said.

Another option raised by the commissioners was the idea of setting up a single revolving fund that would be replenished by loans made to clean energy businesses, a strategy that would phase out the need to have ratepayers fund the program. The state has a similar program to finance upgrades to wastewater treatment plans through a revolving loan program.

After the meeting, Matt Elliott, clean energy advocate for Environment New Jersey, expressed some concerns with the board’s assumption that high energy costs are driving people and businesses out of the state. Elliott argued other issues, such as high property taxes, rise above energy costs when such decisions are made.

“They weren’t talking about the impact of cuts in the program which already have had an impact on clean energy businesses in New Jersey,’’ he said. “When you cut these programs, you create uncertainty and when that happens, they lose business or struggle to stay in the state.’’