Is the Clean Energy Fund Suffering From a Surplus of Cash?

Tom Johnson | February 23, 2012 | Energy & Environment
For the past four years, politicians have raided the clean energy program to help balance the budget

When asked why he robbed banks, Willie Sutton famously replied because that is where the money is.

Perhaps that same rationale applies to New Jersey’s clean energy program, an apparently golden pot of money that legislators and governors raid annually, a ritual repeated for the past four years.

Instead of financing energy efficiency and renewable energy projects, more than $400 million in money collected from gas and electric customers has been used to balance the state budget, a tactic that has come under increasing criticism from clean energy advocates and utility lobbyists.

The state has been able to tap into the fund largely because the program overseen by the Board of Public Utilities, has consistently collected more money from ratepayers than it is either willing to or can spend.

The latest diversion by the Christie administration could intensify pressure to scale back a controversial surcharge used to finance clean energy programs, an expense that is especially costly for large businesses and institutions that use a lot of energy. The surcharge, dubbed the societal benefits charge (SBC), costs Princeton University more than $1 million annually.

“It underscores the need to collect what you budgeted for so these surplus funds don’t exist,” said Steven Goldenberg, an energy lawyer who chaired a special state working group that studied the issue for the BPU. “That would be consistent with the goals of the state Energy Master Plan to reduce the costs of energy, including the SBC.”

That thought was echoed in a report issued by the working group. The program “should spend what it collects and not collect what it cannot or will not spend,” according to the report issued last year. It also argued that a more accurate budget process would provide opportunities to reduce the charge.

That view has been endorsed by the state Division of Rate Counsel Stephanie Brand. In November, she testified at a hearing on the issue, saying: “Ratepayers are choking under high energy prices.” Too often, Brand said the clean energy budget raises far more than it spends.

Take 2010 as an example. In that year, the state agency approved a budget of $460 million for the clean energy program, but committed to spend only $381 million. That recurring practice came under fire from the special working group, which studied ways to reduce the state’s reliance on the SBC. It stopped short of recommending a dramatic scaling back of the surcharge, rejecting the notion that clean energy programs could be financed out of a revolving loan fund.

To some, the diversion of funds underscores a problem that policymakers have turned to in tough fiscal times.

“Increasingly, the utility bill is becoming a vehicle to do things that people would otherwise say “No” to if they had to pay taxes,”‘ said Karen Alexander, president and chief executive officer of the New Jersey Utilities Association at an energy forum in Trenton this past April.

But clean energy advocates argued otherwise.

“With this program, you want a surplus at all times,” argued Matt Elliot, clean energy advocate for Environment New Jersey, a group that has lobbied for more funding for clean energy programs, such as those that reduce energy consumption and promote cleaner sources of power, like solar and wind.

“Projects are being built then retroactively get their money,” Elliott said. “It gives certainty to the market so contractors know there’s money in the bank when they build these projects.”

Jeff Tittel, director of the New Jersey Sierra Club, said the latest diversion of funds might reflect a move to get rid of the societal benefits charges, a step he noted was rejected by the special working group due to an outcry from clean energy advocates.

“It seems like they are doing all they can to undermine the program so they can say we do not need it anymore,” he said.