Repeated Raids on Clean Energy Fund Sets Back State’s Energy-Efficiency Efforts

Christie administration announces plan to divert another $10M to plug hole in state budget

Credit: Governor's Office/Tim Larsen
New Jersey is lagging in its efforts to promote clean energy and energy efficiency programs because of repeated raids on funding for the projects, according to environmentalists and industry advocates.

Those concerns were underscored again yesterday when the state Board of Public Utilities disclosed it learned late last week that the Christie administration is planning to divert another $10 million in clean energy funds to plug a gap in next year’s state budget. That brings to more than $160 million the amount that may be appropriated from the program in the next fiscal year alone.

In the first three years of his administration, Gov. Chris Christie and legislators will have siphoned off in excess of $800 million in various clean energy funds, virtually all of which have been financed by electric and gas customers, if the latest diversion is approved. Critics call it a hidden tax on residents.

The appropriations are taking a toll on New Jersey’s efforts to promote cleaner ways of producing power and to curb energy use in a state with some of the highest electricity costs in the nation, clean energy advocates argue. They also come at a time of heightened public debate about the subsidies the state requires utility ratepayers to bear to promote cleaner but more costly sources of energy, such as solar and wind, as well as new natural-gas-fired power plants. The cost is expected to run into billions of dollars over the next decade or so.

“New Jersey has largely stood still while other states have done more,’’ Steven Nadel, executive director of the American Council for an Energy Efficient Economy, a nonprofit group seeking to promote policies that reduce energy consumption.

The state used to be a leader in energy efficiency (ranked number eight among the 50 states as recently as 2007), but it has been steadily slipping to the middle of the pack (ranked 16th in the 2012 scorecard by the organization), according to Nadel.
Not only has state spending for energy efficiency dropped, but utility expenditures and energy-efficiency savings have taken a tumble as well (from ranking ninth nationwide in 2007 to 21st in 2012).

Many in the energy sector argue that energy efficiency should be a top priority of policymakers. It can reduce gas and electric bills and promote the development of thousands of jobs. What’s more it can curb the air pollution that contributes to global climate change, as well as health problems from emissions that cause ground-level smog.

Even a BPU commissioner expressed concerns about the diversions at a hearing on a straw proposal to fund clean energy programs next year and for the following three years.

“Our energy efficiency programs are not where they should be,’’ said BPU Commissioner Jeanne Fox, one of the two Democrats serving on the five-member board during a hearing in the agency’s offices in Trenton. She blamed the slide on the persistent funding diversions, which first began in the Corzine administration.

In his opening remarks, BPU President Bob Hanna sought to argue a full suite of energy efficiency programs will be funded by a proposed $379 million clean energy budget in fiscal year 2014. That total, however, includes the more than $152 million expected to be diverted to the general fund (which may now include another $10 million), a projection only based on arcane state accounting principles requiring the allocation to be included in the spending plan until it is diverted elsewhere.

More than anything, however, the state is pushing to develop more combined heat and power (CHP) facilities, which produce electricity generally a lot cheaper than conventional power plants.

Besides being more efficient, many CHP plants remained operating in the wake of Hurricane Sandy at hospitals, universities, and other facilities, a situation that has spurred the Christie administration to promote their development as a way of minimizing widespread outages at critical locations.

As an energy-efficiency project, CHP delivers “a lot of bang for the buck,’’ Hanna said, as well as dovetailing with the administration’s goals to mitigate the effects from future extreme storms.

More than $30 million is included in the budget for CHP, while at the same time a new working group at the agency is investigating ways to further fund its development, without depending on a surcharge on customers’ gas and electric bills.

CHP advocates welcomed the appropriation, as well Hanna’s support for the technology. “It’s a good signal for the industry,’’ said Gearoid Foley, New Jersey director of the United State’s Department of Energy Mid-Atlantic Clean Energy Application Center.

Others were not so enthusiastic about CHP, arguing that the state needs to focus on reducing greenhouse gas emissions. Christine Guhl of the New Jersey Sierra Club, urged the state to adopt an energy-efficiency portfolio standard, similar to what New Jersey has done to promote solar development.

“We’re not getting the [energy] savings that other states are getting,’’ she said.

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