Draft Energy Plan Remains Work in Progress

Controversial recommendation to reduce surcharge that finances clean energy programs still on the table

The Christie administration is not yet done tinkering with its draft Energy Master Plan, saying it will come out with recommendations later this month, including options for scaling back a surcharge on gas and electric bills that finances most of the state’s clean energy programs.

In scheduling a series of four hearings, the New Jersey Board of Public Utilities (BPU) will focus on recommendations from special working groups that have been meeting privately to deal with key issues left unresolved in a draft energy plan issued in June.

The suggestions range from promoting the development of alternative-fueled vehicles, such as plug-in electric vehicles and ones using compressed natural gas and propane, to developing facilities that use yard waste, farm crops, and landfill gas to produce electricity or fuel for vehicles. The groups also explored what types of innovative energy technologies the state should explore. These would include such emerging technologies as producing electricity from tidal power.

Probably the most controversial recommendation — and the subject of the first hearing on October 21 — deals with clean energy funding alternatives. Its working group is expected to suggest ways to reduce the state’s reliance on the societal benefits charge (SBC) , a surcharge most utility customers pay to support state programs to reduce energy use and to promote cleaner energy sources, such as solar and wind power.

The surcharge, however, has been become a lightning rod for criticism of the state’s energy policies, particularly from businesses, which can pay anywhere from $25,000 a year for small manufacturing operations to more than $1 million for large pharmaceutical companies. For residents, the surcharge is much more modest, amounting to about $5 a month on the typical customer’s bill. This current fiscal year, the charge raised $312 million for clean energy programs.

In the June draft energy plan, the administration talked about reducing the surcharge by either creating a revolving loan program to finance clean energy programs or establishing an “energy efficiency utility,” which would provide zero- or low-interest loans to customers, who would repay the money from the energy savings they reap.

It is unclear what options the working group will recommend, but it is not expected to change two key energy programs financed by the surcharge, according to people familiar with the discussions. These are providing money to gas and electric utilities to cover the costs of unpaid customer bills and financing a low-income energy assistance program to ensure the poor pay no more than 6 percent of their total household income on utility bills.

Business lobbyists welcomed changes in the surcharge. “It’s costing us a fortune,” said Hal Bozarth, executive director of the Chemistry Council of New Jersey, which represents many large companies that use huge amounts of electricity and pay big surcharges. “We can’t afford it anymore.”

The Clean Energy Funding working group also is expected to address a pressing problem affecting New Jersey’s highly successful solar industry. In recent weeks, the price of solar renewable energy certificates (SRECs), which owners of solar arrays earn for the electricity they produce, have fallen steeply, raising concerns that growth in the sector could stall.

The recommendations by the four working groups, however, heighten concerns among some clean energy advocates that the state is scaling back its goals to promote renewable energy. None of the environmentalists who have been critical of the administration’s draft plan were on any of the public working groups that have been disclosed to date.

“It feels like we’re letting industry write the state’s energy policy,” said Matt Elliott, clean energy advocate for Environment New Jersey. “When it comes to the state’s energy policy, we need more voices in the room than just industry.”

While many industry officials make up the working groups, there also were members of academia and various public officials represented.

In a working group assigned to assess opportunities for exploiting biomass technologies, the core recommendation was to establish a power and fuels initiative that would lead to joint public-private partnerships within two or three years to develop a number of biomass-to-energy technologies for producing electricity and fuels for vehicles.

The group suggested that biomass, which includes farm crops, food wastes, and forest residues, among other things, could produce up to 1,124 megawatts of electricity and up to 311 million gallons of fuel for vehicles annually.

As far as alternative vehicles are concerned, the working group noted that New Jersey has made only a modest stride toward developing stations to refuel vehicles powered by electricity, natural gas, or propane. A total of 51 fueling stations have been installed in New Jersey, the bulk of them involving compressed natural gas (20 with only three available to the public).

The working group’s report recommended the state explore ways to develop more refueling stations for alterative fuels, either by establishing a revolving loan fund or leveraging private capital.