Diverted Clean Energy Funds Prove ‘Use It or Lose It’ Adage

Christie has tapped more than $680 million for state coffers despite calls that unused money should return to consumers

Credit: Amanda Brown
Assemblyman John Burzichelli (D-Gloucester)
Use it or lose it.

Assemblyman John Burzichelli (D-Gloucester) gave that advice to Board of Public Utilities President Bob Hanna during an appropriations hearing yesterday, referring to the Christie administration’s diversion of more than $210 million of clean energy funds to help balance the proposed state budget.

“That should be a lesson,” Burzichelli said at a hearing in the Statehouse Annex. “If you don’t spend it, the treasurer is going to take it.” He wasn’t blaming the current treasurer, saying he would probably do the same if tempted.

The diversion of clean energy funds has been a source of ongoing friction between the administration, on the one hand, and environmental groups and Democrats on the other side. Although they control the legislature, however, Democrats have never blocked using the money to plug holes in the state budget.

Gov. Chris Christie is not the first executive to siphon off money from the fund, but he has been much more aggressive than his predecessors. Since he has taken office, Christie has tapped various clean energy funds for more than $680 million to put into the general fund.

The bulk of the money has come from money raised by a so-called societal benefit charge on electric and gas customers’ monthly bills, a surcharge that costs the typical residential ratepayer anywhere from $35.75 a year for customers of Atlantic City Electric to as much $60.47 annually for Public Service Electric & Gas customers.

The cost to businesses, colleges and other large users of energy is much steeper. For example, Princeton University pays more than $1 million a year in societal benefit charges. It is not unusual for large manufacturers to pay similar amounts, and even more.

All told, the fund is one of the major revenue sources in New Jersey government, raising $792 million in the calendar year 2010, according to documents submitted to the legislature by BPU.

The Christie administration is looking into ways to reduce that burden, including changing the clean energy program from a system of awarding grants to one based on a revolving loan fund, but that proposal got a lukewarm response from a special working group set up by the BPU.

In a report it issued, the group noted various studies have shown such revolving loan programs have had “difficulty covering their own costs, getting participation from the eligible population, and realizing energy savings.”

The clean energy program typically fails to spend all of the money it collects from ratepayers, a failing criticized by the same working group that had been set up to explore ways to cut customers bills. In the calendar year 2010 to 2011, Hanna noted the surplus was $241 million and $206 million in the following year.

“Some of that lag is attributed to the economy slowing down,” Hanna explained to the Assembly Budget Committee. The program typically spends about $300 million a year on clean energy projects.

Burzichelli seemed unconvinced. “It’s a lot of money,” he said, suggesting if the agency cannot spend all the money it raises from ratepayers, it ought to develop a mechanism to return to consumers the funds it does not spend.

“That is a legislative option to reduce it,” Hanna replied. Because the agency is overhauling the way it oversees the program, Hanna told the committee it is not likely to speed up expenditures during the transition process.

Hanna also noted New Jersey’s courts have repeatedly held that clean energy funds are available for the general fund, a case he argued when he was the director of the Division of Law in the Attorney General’s office.

But environmentalists still are unhappy.

“This money was put up by ratepayers for projects that create jobs and reduce pollution, while saving consumers money,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “The governor by stealing this money has created a hidden tax that hurts the environment and the economy.’’