Assembly Panel Moves on Energy Portfolio for Combined Heat and Power

Proposal comes just weeks after state's clean energy fund slashed by $60 million

Assemblyman Upendra Chivukula (D-Somerset).
Less than two weeks after the state cut funding for a program to build more efficient power plants, lawmakers approved their own initiative to spur construction of new generating units, an issue given a high priority in the Christie administration’s Energy Master Plan.

The fate of the proposal, voted out quickly by the Assembly Appropriations Committee on Monday, remains uncertain because the state Board of Public Utilities is trying to achieve the same objective, but through a different approach. Its option, however, has yet to move forward despite months of stakeholders’ discussions.

What both sides hope to encourage is a way stimulate the building of combined heat and power plants, where electricity and heat are produced simultaneously. A more efficient and cleaner way of producing power, CHP is viewed as an important step in averting the shutdown of critical government facilities, such as hospitals, prisons, and water treatment plants in the event of big storms like Hurricane Sandy.

By 2020, the administration’s Energy Master Plan calls for 1,500 megawatts of new CHP facilities to be built, a goal that seems increasingly elusive given repeated raids on funds aimed at encouraging the development of those plants. Earlier this month, a revamped budget for the state’s clean energy program cut funding for CHP projects from $95.6 million to $33.2 million.

The cuts repeat a pattern of the Republican administration and the Democratic-controlled Legislature dipping into clean energy funds to help plug holes in state budgets in recent years. Among other diversions involving more than $800 million in ratepayers’ subsidies, the state siphoned off $164 million in surcharges paid by businesses aimed at promoting cleaner-running power plants.

CHP proponents have repeatedly argued that the diversion of funds designed to promote the new power plants sends a negative signal to investors who want to promote their development, which they say need some kind of subsidies to make them economically viable.

Under the bill (A-1384), sponsored by Assemblyman Upendra Chivakula (D-Somerset), a certain portion of electricity sold in New Jersey would have to be produced by CHP units or fuel cells — a requirement similar to renewable energy standards established for solar power and other alternative-energy technologies.

Fred DeSantis, a lobbyist for a CHP developer, said the measure would help fortify nonprofit hospitals and other critical facilities during future extreme storms. “This bill supplants the existing subsidy program’’ he said.

CHP facilities managed to keep the lights on at Princeton University when more than 2 million people lost power during the storm.

Joseph Sullivan, a vice president of Concord Engineering, a firm seeking to develop CHP projects, noted past initiatives to support the development of cleaner-running plants have faltered, citing the latest $60 million cut in the program. Both he and DeSantis argued the repeated shifts in state policies discourage investment in such projects.

Others, however, disagreed.

Sarah Bluhm, a vice president of the New Jersey Business & Industry Association, said her group supports the development of CHP projects, but not at the cost of adding new burdens on residential and business customers. She said ratepayers would be on the hook for many years to pay off the costs of the program.