Op-Ed: Treat All Electricity Customers Fairly

Jay L. Kooper | June 19, 2012 | Opinion
Changes to New Jersey solar legislation are needed to ensure that consumers receive equitable treatment

Two years after receiving subsidies costing New Jersey’s electricity consumers tens of millions of dollars, the solar industry is back, and legislation is on the fast track in Trenton that this time will cost hundreds of millions of dollars annually.

The legislation will nearly triple the amount of solar power to be sold in the state and will impose costs of $337 million to $435 million annually, increasing consumer costs by 5.5 percent to 7.1 percent, or $3.84 to $4.97 per megawatt-hour, beginning June 1, 2013.

Unfortunately, the bill compounds this problem by singling out customers who have shopped with competitive retail electricity suppliers to bear the immediate burden of these costs and fund this multimillion-dollar solar-support mechanism, while primarily shielding customers who remain with utility service. This requires competitive retail electricity suppliers and their customers to fund not only their share of the new solar-support mechanism, but the obligations of exempted utility customers as well.

This unfair allocation of costs will have dire consequences for New Jersey’s competitive retail electricity market, putting at risk the supply sector that is providing economic savings and value-added products for New Jersey consumers in these difficult times. Unfortunately, this in turn will decrease competitive options for consumers and ultimately further increase electricity costs.

This also will adversely impact the very market for solar power the legislation is attempting to buttress. Retail electricity suppliers are currently among the largest purchasers of solar power, but forcing them and their customers to pay the costs avoided by utility customers is unfair and could harm New Jersey jobs and economic development.

Shopping customers and competitive retail electricity suppliers should not be singled out for unfair treatment while the state’s utilities, having enjoyed protected monopoly status for so long, continue to be treated as a privileged class not obligated to pay their fair share.

To provide for equitable treatment of all New Jersey consumers and avoid disrupting the state’s competitive retail electricity market, the Retail Energy Supply Association (RESA) — the nation’s leading retail energy supplier trade association — is encouraging the Legislature to treat existing retail supply contracts the same as wholesale contracts and exempt them from the new higher solar power requirement.

RESA strongly supports New Jersey’s efforts to promote renewable energy, and many RESA members offer a variety of renewable energy products and services to customers. Legislation intended to preserve New Jersey’s status as a solar energy producer should not single out retail electric suppliers and their customers for disparate treatment and, in the process, harm one industry sector that is providing savings to customers. This is unnecessary and patently unfair.

Let’s improve the legislation by making certain it treats all customers fairly and equitably.