Fine Print: Promoting Distributed Generation in New Jersey (A-1410)

Tom Johnson | January 24, 2014 | Energy & Environment
Bill would establish alternative energy portfolio, chiefly with goal of boosting CHP as power source

Synopsis: The bill aims to primarily promote the development of combined heat and power (CHP) plants, a cleaner and more efficient way of producing electricity while potentially lowering energy bills.

Sponsor: Assemblyman Upendra Chivukula (D-Somerset)

What it aims to do: The bill would establish an alternative energy portfolio standard, a measure that would require the state’s four gas utilities to purchase a proscribed amount of electricity from designated alternative energy facilities each year. It is somewhat akin to what electricity suppliers must do to meet state-mandated requirements to purchase a set amount of electricity from solar systems in New Jersey each year.

How it came about: The state’s Energy Master Plan outlined a goal of building 1,500 megawatts of CHP by 2020, a target that is increasingly looking to be difficult to reach. CHP is viewed as a way to “harden’’ the power grid and reduce outages, particularly at many critical public facilities, such as hospitals, wastewater treatment plants, and other public facilities. The proposed bill is roughly based on a straw proposal developed by the staff of the New Jersey Board of Public Utilities last year.

How it would work: The state’s gas utilities would solicit proposals from the alternative energy facilities to comply with the new requirement to buy electricity from such units. The costs would be passed on to utility customers. In some cases, applicants may receive financial incentives such as grants or reduced interest or interest-free loans from the gas public utility, which also would be passed on to ratepayers.

Why it may raise concerns: New Jersey has some of the highest energy bills in the country and passing the cost on to utility customers to develop these facilities may add to that expense. Also, environmental groups are likely to object to establishing a new portfolio standard for CHP since the plants generally run on natural gas, a fossil fuel.

*Prospects: Uncertain. While there is a contingent of lobbyists urging the state to develop a program to help finance CHP, both lawmakers and the BPU have to date been unable to agree on a mechanism that would make that happen.