In Letter to Governor, NJ Businesses Oppose Subsidized Power Plant Scheme

Tom Johnson | July 14, 2011 | Energy & Environment
Companies argue that competitive electricity markets are critical in tough economic times

In a break with a few trade groups here, 14 businesses in New Jersey are calling on the Christie administration to halt its efforts to develop new power plants in the state through hefty ratepayer subsidies.

In a letter to Gov. Chris Christie, the executives of those firms argued the competitive wholesale and retail electricity markets are critical to their viability in tough economic times.

“We’re concerned that energy policy in New Jersey is shifting away from the successful competitive market embraced over the last decade to a government control model focused on subsidies which will ultimately lead to higher prices,” the executives said in the letter released yesterday.

Strong Supporters

The stance taken by the businesses contrasts with the support from the New Jersey Business & Industry Association and Chemistry Industry Council of New Jersey, which strongly backed efforts by the legislature and Christie administration to develop a pilot program to help finance three new power plants with subsidies from ratepayers.

They argue that whatever subsidies are paid by consumers and businesses — projected to run $1.6 billion — will be more than offset by a drop in overall energy costs by having nearly 2,000 megawatts of new generation available in New Jersey, a step that would reduce congestion and capacity prices that cost consumers billions each year.

The comments from the 14 businesses adds a new wrinkle to an ongoing debate over New Jersey’s pilot program, an effort that even state officials concede may have been derailed unless the Federal Energy Regulatory Commission (FERC) reverses a decision that many view as blocking the development of new power plants with ratepayer subsidies.

It also signals just how strongly the incumbent power suppliers oppose the pilot, which they have fought before FERC as well as in the federal courts. The letter to the administration was released by Compete, a coalition more than 577 electricity stakeholders, including customers, suppliers, generators, transmission owners, trade associations, environmental organizations and economic development corporations.

The signatories to the letter include representatives from 7-Eleven, Inc.; Best Buy; BJ’s Wholesale Club, Inc.; Boston Market Corp.; BSL Paramus LLC; Leggett & Platt, Inc.; Macy’s, Inc.; PetSmart, Inc.; Rite Aid Corp.; Safeway, Inc.; Sears Holdings; Seashore Surgical Institute; SuperValu, Inc.; and Wal-Mart Stores, Inc.

“It’s a de facto energy tax,” said Steve Elsea, director of energy services for Leggett & Pratt, which runs a manufacturing plant in Edison. “It will create non-bypassable energy charges no matter what energy supplier I choose.”

Elsea disputed the assertion that any ratepayer subsidy would be more than offset by a drop in an overall energy bill. “We have experience with such legislation in other areas and over the long run, it’s been a negative,” he said.

The letter echoed that point. Forcing business customers to subsidize in-state plants will drive jobs from New Jersey rather than help creating jobs,” the letter claimed.

Elsea echoed that argument. “Frankly, as an end-user in New Jersey, I don’t care where my generation is from,” he said. “If I can get cheaper electricity from elsewhere, then let the markets work.”