Utilities Say They Can Help State Cut Power Consumption, Boost Reliance on Renewables

Tom Johnson | July 28, 2011 | Energy & Environment
Public utilities embrace controversial Energy Master Plan, but lobby to upgrade gas and electric infrastructure and deploy smart metering

If New Jersey is going to meet its goals to reduce energy consumption and increase its reliance on solar power and other renewable energy sources, it is clear that the state’s utilities want to be part of the effort.

In their first public comments on the state’s revised Energy Master Plan, several gas and electric utilities embraced its overarching goals — reducing energy costs, promoting a diverse balance of generating sources, and striving to attain the 22.5 percent goal of having electricity produced from renewables by the turn of the next decade.

At a hearing in Newark on Tuesday, utility executives also said they were uniquely positioned because of their long relationship with their customers to help achieve goals to cut energy consumption, a top priority of many who spoke at the more than five-hour hearing.

They also lobbied, however, for modernizing their gas and electric transmission systems and advocated for smart grids and advanced metering systems that provide customers with real-time pricing that could lead to significant changes in how businesses and even homeowners use energy and when.

Paying the Price

These changes also carry a big price tag. New Jersey Division of Rate Counsel Director Stefanie Brand cautioned the state Board of Public Utilities (BPU) to move very slowly on advanced meters for all customers, saying that while it may make sense for some ratepayers, it could force small businesses, such as a bodega in Newark with huge refrigeration needs, out of business. The smaller grocery stores would face steep charges if they had to pay higher electricity costs at peak demand times during the summer.

For residents, Brand said “the cost of the meter may be more than what they would save on energy bills.” In addition, she noted there was an issue revolving around awarding utilities “stranded costs” to recover their investment in the old meters, some of which would not have been fully paid off by the customer.

There have been a couple of pilots involving smart meters in residential houses, but, to date, staff at the board has been resistant to approving a large-scale program. Besides the cost, smart meters have been criticized for not significantly reducing energy consumption, but merely shifting power use to times when electricity is less expensive.

Decoupling Usage

Beyond smart meters, if the utilities help the state curb energy usage, they made it clear they want to “decouple” rates as California has done to make sure the gas and electricity ratepayers save does not hurt their bottom lines. Under decoupling, utilities’ profits would not be based on how much gas or electricity they deliver, but typically the number of customers served.

There are currently two pilot decoupling programs involving South Jersey Gas and New Jersey Natural Gas, but Vince Maione, president of Atlantic City Electric, said any electric decoupling programs must be broader than the current natural gas pilots.

That worries some environmentalists. “It’s the weakest part of the plan,” said Dena Mottola Jaborska, executive director of Environment New Jersey. “There’s no economic analysis of the whole picture of what this will cost.”

While the energy master plan focused on the high cost of renewables, it failed to address the costs to consumers of providing subsidies to natural-gas fired plants the administration is seeking to build, she said.

If the state is going to achieve its renewable energy goals, Maione warned it will require upgrades to the transmission system, a point echoed by Anne Hoskins, a senior vice president of Public Service Enterprise Group (PSEG), the owner of Public Service Electric & Gas. The Newark-based utility plans to spend $3 billion over the next five years upgrading its electric transmission system and also said it needs to modernize its gas distribution system, although Hoskins did not put a price tag on that investment.

PSE&G also said it would like to expand its Solar 4 All program to help the administration achieve its goals of putting new solar systems on landfills, brownfields and government facilities. The utility has spent more than a half-billion dollars on its current solar initiative, but told the board it could develop up to 120 additional megawatts if the program was extended. It has yet to file any detailed program with the agency.

Ed Graham, chief executive officer of South Jersey Industries, said his company is ready to invest in solar; combined heat and power plants, which generate electricity and steam simultaneously; and fueling stations for compressed natural gas.