The Legislature may soon take another stab at trying to get New Jersey residents and businesses to sharply curtail how much energy they use.
Sen. Bob Smith (D-Middlesex), the chairman of the Senate Environment and Energy Committee, is drafting a bill, S-2700, that could lead the state to adopting an energy efficiency portfolio standard, a measure that would force gas and electric utilities to demonstrate reductions in energy use by their customers.
The legislation, not yet available to the public, is similar to bills that have been taken up by the Assembly in previous years, but have yet to be enacted into law.
In essence, the bill aims to promote more energy efficiency projects by establishing a new statewide program, similar to what has been done to spur the solar energy industry in New Jersey.
Here’s how it would work:
The bill asks the New Jersey Board of Public Utilities to conduct a proceeding to decide whether the state should establish an energy efficiency portfolio standard. If so, utilities would be required to purchase energy efficiency certificates to ensure the state’s targets for reducing energy use are met.
The issue is important to consumers because New Jersey’s energy costs — for residents, small businesses and big industrial customers — typically rank in the top 10 for highest utility bills in the nation.
Business lobbyists often cite a state study, which found that 25 percent or more of those costs are due to state or federal mandates, such as subsidies to pay to promote renewable energy projects.
But few dispute the idea of aggressively reducing energy consumption, a goal even the state’s largest gas and electric utility, Public Service Electric & Gas, has embraced – if less gas or electricity are sued , there is less impact on the environment, and it may reduce the need for new power plants and high-voltage power lines.
“Energy efficiency is the biggest untapped resource we have in New Jersey, both environmentally and economically,’’ argued Jeff Tittel, director of the New Jersey Sierra Club. “It’s the best way to lower prices for consumers, lower pollution levels and make the power grid more reliable.’’
But some object to establishing a new portfolio standard, because — like the one established for solar-energy systems — the cost is ultimately borne by electric and gas ratepayers.
New Jersey Division of Rate Counsel Director Stefanie Brand questioned at a legislative hearing last year whether such a system could work in the state, which has deregulated both its electric and gas monopolies.
“It’s different for energy efficiency because it should be cost-effective on its own,’’ Brand said at another legislative hearing in 2010.
The issue has resonated with business groups, which have raised increasing objections to growing surcharges on their utility bills to pay for clean energy programs, only to see more than $600 million of clean energy funds diverted from the program to balance state budgets in recent years.
As a result, the BPU approved a program to allow large industrial customers to use the money they put into the clean energy fund for energy efficiency projects at their own facilities.
Under the state’s energy master plan, New Jersey sets a goal of reducing energy consumption by 2020, but the state abandoned a previous goal to curtail energy use by 20 percent by that date.
Assemblyman Upendra Chivukula (D-Middlesex), chairman of the Assembly Telecommunications and Utilities Committee, is pushing his own bill to promote energy efficiency, A-1383, which was approved by the panel in March 2012. It has yet to be taken up by the Assembly.
One issue that could stall both Smith’s and Chivukula’s bills is a provision that would establish alternative technologies programs, including one that would provide incentives to promote increased use of natural gas, which produces less pollution than coal. The proposal drew criticism from both Brand and clean-energy advocates.