State Takes Big Bite Out of Clean Energy Program

Tom Johnson | November 26, 2012 | Energy & Environment
Administration and Legislature divert $331.5 million, drastically curtailing what program can accomplish

New Jersey’s clean energy program will be much skinnier and less aggressive over the next few months.

In an order approved this past week, the state Board of Public Utilities adopted a revised spending plan that will further reduce energy efficiency programs and financing for renewable energy projects.

The new spending plan results from the diversion of $331.5 million in clean energy funds by the Legislature and Christie administration to plug holes in the state’s overall budget.

The diversions have been criticized by clean energy advocates and some lawmakers, since the money for the projects is financed by a surcharge on customers’ electric and gas bills. It adds up to about $60 a year for the typical residential customer and more than $1 million annually for businesses, which consume a lot of energy.

While the board unanimously approved the revamped spending plan on Tuesday, BPU Commissioner Jeanne Fox expressed disappointment with the diversion of the funds.

“This was a tough thing to do,’’ said Fox, a former president of the board who pushed for an aggressive expansion of clean energy programs during her tenure as head of the agency. “I am extremely disappointed with the Governor, the Treasury and the Legislature for diverting more than half of the clean energy program.”

The BPU originally allocated $651 million for the clean energy program in a budget it approved 11 months ago, but the revised plan only proposes to spend $339 million.

The cuts were necessary after a decision to redirect $200 million in unused funds in the 2012 state fiscal year budget, as well as an additional $131.5 million to pay for the state’s energy costs and other energy projects, according to Michael Winka, director of the BPU’s Office of Clean Energy.

With the reduction of $131.5 million to the state’s general fund, it left $63 million for new incentive payments, program costs and new commitments. As a result of the diversions, the revised budget called for an additional $93 million in reductions in the 2012 budget to provide an additional $93 million for 2013.

The state’s clean energy fund has helped New Jersey become a leader in promoting clean energy, particularly in developing solar energy. As of this past September, there were more than 18,000 solar systems installed in the state, the most of any state other than California.

Fox, however, echoed questions about the repeated diversion of clean energy funds, a criticism often voiced by clean energy advocates. “I’m hopeful this will not happen in the future,’’ she said, saying it already is hurting efforts to develop combined heat and power plants, a strategy given a priority in the state’s Energy Master Plan.

At one time, the state had more than $100 million set aside for such projects, which generate electricity and heat simultaneously, but that money too was diverted to help balance the state budget. Fox noted the agency had a much smaller program to give out incentives to industry to pursue such projects but there were no takers.

“Without the continuity of a program, business is not going to plan to participate because it takes time and money to plan,’’ Fox said.