Opinion: Beyond Defense, in Praise of the SBC

R. William Potter | October 31, 2011 | Opinion
The SBC is an easy target, one that saves commercial ratepayers $11.00 for ever $1.00 invested in it

How do we explain the rash of attacks from critics on the left and right against the Societal Benefits Charge?

For the past few years, an informal alliance of ratepayer activists and large energy users — apparently backed by the Christie Administration — has been pressing the Board of Public Utilities (BPU) to cut back on the SBC, which appears on every gas and electric customer’s utility bills as a “surcharge.”

While the amount of money raised by the SBC is undeniably huge — more than $700 million last year — the affect on individual customer bills is modest, “approximately 3.8 percent,” according to the BPU website. This translates into an annual bite of about $56 a year for a residential electricity user and $51 for gas customer, or less than 30 cents a day.

Moreover, not even the fiercest SBC critic has openly disputed that the surcharge finances important societal programs. These include a Universal Services Fund dedicated to helping the poor and jobless pay their utility bills and avoid freezing in the dark, as sometimes happened before the start of these social programs.

There’s also a nuclear plant decommissioning fund held in a trust account for the safe cleanup of New Jersey’s four nuclear reactors after they are finally retired, starting with Oyster Creek — the oldest commercial reactor in the nation still operating — in 2018.

Who can be against setting aside funds paid by current users of the power produced by these nuclear units to pay for safe cleanup when they are finally deactivated?

Another part of the SBC goes to the remediation adjustment clause, or RAC, for short. The RAC funds another important cleanup program. This one removes toxins left in the ground and water from the old practice of making natural gas in coal gasification plants long ago shuttered and scattered around the state.

The SBC also underwrites the cost of consumer education, intended to help ratepayers sort through the complex issues of customer choice following the breakup of traditional utility monopolies..

Finally, we come to the most vocal aspect of the anti-SBC controversy: About a third of the surcharge is spent on New Jersey’s hugely successful Clean Energy Program, going to Energy Efficiency (EE) improvements and Renewable Energy (RE) development.

The largest portion by far goes to the EE — a vast menu of energy-saving investments, from the latest compact fluorescent bulbs, attic insulation, heat pumps, and dozens of other devices that cut utility bills wherever they are installed, while also reducing everyone’s costs by slicing into peak load demand for the electric power and gas we all pay for.

In fact, the BPU website says that every dollar invested in residential EE programs “returns $4.00 in savings . . . and $11.00 in savings for commercial and industrial customers.” Where else can you get returns on investment like that? Not even Bernie Madoff made such claims.

Meanwhile, RE, especially solar photovoltaic (PV) electric systems, now account for a dwindling portion of the SBC, down to 4.5%, according to the BPU. Most solar projects are now financed through a quasi market-based program that no longer relies on SBC-funded rebates.

With all this going for it, why are there so many — or any — attacks on the SBC, including claims by at least one state legislator that the SBC was the “last straw” in forcing Ocean Spray to close its South Jersey operations?

I have a theory that’s illustrated by an old joke:

A policeman comes upon an inebriated man on all fours under a street light. “What are you doing?” he asks. “I’m looking for my cufflinks,” comes the reply. Being a kindly sort, the officer drops to his knees and helps with the search. After a few minutes, the policeman asks “where exactly did you lose them?” “Over there,” the man answers, pointing into the darkness. “Well, why are you looking here?” the angered cop asks. The answer: “Because the light’s better here.”

And so it is with the SBC. For many years the varied functions of the SBC were hidden from view in utility bills, but the 1999 deregulation required the unbundling of bills into their parts. Hence, the appearance of the SBC starting a decade ago.

Note to regulators and politicians: If 96.2% of utility charges are someplace other than under the streetlight shining on the SBC, brave the dark and look there for cost savings. And don’t cut the SBC, which can be a big part of the solution to high energy costs.

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