Fine Print: Government Energy Reliability & Savings Public-Partnership Act

Tom Johnson | July 17, 2013 | Energy & Environment
Bill encourages energy-project partnerships between public bodies, private sector

Sponsor: Assemblyman Upendra Chivukula (D-Somerset)

What it does: The bill aims to develop partnerships between public entities and the private sector to build energy-related projects at government buildings, a step advocates say could help harden the power grid in the event of future extreme weather events. Proponents hope it will complement other initiatives moving forward in the Christie administration, primarily a program to award up to $100 million to promote development of combined heat and power (CHP) plants. CHP is widely viewed as a way to make the grid more reliable by building smaller, more efficient and less-polluting electric generating units around critical facilities, such as hospitals, wastewater treatment plants, and prisons.

How it works: It would allow the private sector to approach government entities to use the former’s expertise and financial resources to foster development of energy-related facilities at government facilities. The definition in the bill allows for a wide array of energy projects, including solar, geothermal and energy efficiency initiatives, as well as CHP projects. The bill is modeled after an economic stimulus law passed in 2009, which helped colleges and universities work with the private sector to develop such projects.

What’s happened so far: The Assembly approved the bill in late June before wrapping up the new state fiscal year budget. The legislation is expected to move quickly if the Legislature decides to come back later this summer to act on more high-profile bills.

What’s to like about the bill: Unlike other initiatives pending in the Legislature, it does not rely on ratepayers to pay for energy-related projects, other than possibly marshaling funds from a surcharge paid by utility customers to fund the $100 million in CHP projects envisioned by the New Jersey Board of Public Utilities. The private sector can also take advantage of investment tax credits not available to public entities, a step that can reduce the cost of projects by as much as 30 percent, according to advocates.

What’s not to like about the bill: The legislation provides an exemption from new property taxes or payments in lieu of taxes. The exact impact in terms of lost local government revenue is uncertain, according to a fiscal analysis prepared by the nonpartisan Office of Legislative Services. But the OLS said it is likely local and state partnerships will be formed under the bill, with revenues generated from the programs offseting any loss of tax revenues. However, some legislators do not like a provision in the bill subjecting the private sector to prevailing wage agreements, a provision the Christie administration has generally opposed.