Pushing the Board of Public Utilities to Lower Energy Surcharge

Tom Johnson | November 11, 2010 | Energy & Environment
Rate Counsel argues that keeping better track of projected costs of clean energy could help lower ratepayers' electric bills

The state needs to do a better job projecting how much it will spend each year on its clean energy program, so it does not collect more money than it needs from utility customers, the director of the Division of Rate Counsel told officials yesterday.

“We shouldn’t be collecting more than we spend,” urged Stefanie Brand, during a hearing on the state’s clean energy program. “Ratepayers are choking under high energy prices.”

The hearing, held in the Statehouse Annex by the Board of Public Utilities (BPU), comes at a time when the new administration is looking to cut back its energy efficiency and clean energy programs and the way it pays for them.

Funding Clean Energy

In the past, the bulk of the Office of Clean Energy’s budget has come from a fee tacked on to utility customers’ electric and gas bills. Dubbed the Societal Benefits Charge (SBC), it raised $740 million last year, about a third of which went to fund energy efficiency and renewable energy projects. Its high cost, particularly to businesses that use a lot of energy, has led to demands from various interests to lower the surcharge.

Brand, whose office is supposed to represent the interests of all ratepayers, both residential and commercial, is among those pushing to lower the SBC. “We have to make reducing the SBC a goal,” Brand told the commissioners yesterday.

Too often, the clean energy budget raises far more than it spends, she said. In the proposed 2011 clean energy budget, Brand noted nearly $200 million in funds were carried over from the current year, a recurring event each year.

Michael Winka, director of the Office of Clean Energy, however, disputed her account, saying $157 million in those carryover funds were already obligated to projects, making the carryover only $43 million.

“Forty-three million is a lot of money,” Brand replied, arguing the state needs to do a comprehensive review and analysis of all the clean energy programs to decide which ones are cost-effective and which should be eliminated.

Money Left Unspent

In the current budget, Brand noted that $1.5 million was allotted for program evaluations, but none of that money was spent. “There isn’t an infinite amount you can spend. There is a saturation point.”

Others who testified before the agency urged the commissioners to try and find ways to maintain a certain level of funding to promote residential solar projects, home energy efficiency efforts and the development of combined heat and power (CHP) plants, which generate electricity cheaper and cleaner than most conventional power plants.

Lyle Rawlings, president of the Mid-Atlantic Energy Industries Association, noted only $5 million has been set aside for renewable energy projects, a drastic cutback that will severely limit rebates, which most smaller solar firms rely on to install systems in homes and small businesses.

“We’re not ready to transition away from rebates just yet,” Rawlings said. “A five million budget is a small fraction of what it used to be.”

Gearoid Foley, New Jersey director of the U.S. Department of Energy’s Mid-Atlantic Clean Energy Application Center, made a pitch to find some way to fund CHP plants, which he described as vital to the state’s efforts to have clean, reliable and cost-effective electricity.

Noting the state has eliminated a retail margin fund designed to bankroll such projects, Foley said the state is falling behind its energy master plan goal of developing 150 megawatts of CHP projects each year. Instead, the state has averaged developing about 5 megawatts to 10 megawatts of CHP in the last decade.