Methane-Capture Facilities at New Jersey Landfills In Danger of Being Shuttered

Tom Johnson | June 30, 2014 | Energy & Environment
Division of Rate Counsel blocks bill to award economically inefficient landfill projects additional renewable energy certificates

Stefanie Brand, director of the Office of Rate Counsel
For years, the state supported projects to capture methane gas from old garbage dumps and turn it into electricity, a process that eliminates a lethal source of greenhouse gas pollution.

But now at least five of those landfill projects are in danger of being closed down, because the engines used to create electricity from the gas frequently break down and are making the facilities economically unviable.

If they are shuttered, it would deprive New Jersey of 20 megawatts of electricity from those landfills, while at the same time leaving utility customers on the hook to pay for power from similar projects in nine neighboring states, according to backers of those projects.

To prevent that from happening, the Legislature is considering a bill (S-2076) that would help offset the costs of some of the state’s landfills by awarding them more renewable energy certificates. But that would saddle ratepayers —
who end up paying for the renewable credits — with additional expenses, according to the state Division of Rate Counsel.

The bill won approval from the Senate Environment and Energy Committee earlier this month, and an identical bill is pending in the state Assembly. It also is likely to be on the agenda at another hearing next month by the same Senate panel, which is concerned about ratepayers funding similar projects in other states that are more economical because of New Jersey’s more stringent pollution standards.

Without the economic relief, five of New Jersey’s county landfill projects are in jeopardy of closing this year, according to a lobbyist representing the facilities. They include projects in Warren, Sussex, Burlington, Atlantic, and Salem counties.

“Ironically our state’s ratepayers would still be funding Class I (renewable energy credits) for identical-out-of state facilities that would be deemed too dirty to be operated in New Jersey,’’ said Fred DeSanti, the lobbyist representing the landfills.

In New Jersey, ratepayers are shelling out about $15 million to pay for the electricity the landfills generate, but more than $100 million at out-of-state facilities, DeSanti said.

In the committee hearing two weeks ago the legislation won support from both environmental and labor groups, but not from the Division of Rate Counsel, which argued in a letter to the panel that the bill inappropriately shifts the risk of “economic loss’’ from the investors in the facilities to gas and electric customers.

“From a risk perspective, this bill is nothing more than a ‘bailout’ of these facilities at ratepayer expense,’’ argued Stefanie Brand, director of the Division of Rate Counsel.

DeSanti disputed the additional renewable energy credits would increase costs to ratepayers.

Neither side disputes what the problem is. Some dumps contain siloxane compounds, which come from hairsprays and aerosols. These more quickly erode the engines used to create the electricity, spiking up maintenance costs.

New Jersey’s emission standards for carbon dioxide and nitrogen oxide to reduce those pollutants are more than twice as stringent as the federal regulations covering nine neighboring states, according to proponents of the bill.

Under the bill, those projects that demonstrate an economic loss would be eligible for additional renewable energy credits to offset those costs. Economic losses for the projects could not include fines and penalties, according to the bill.

But Brand argued the bill “generally thwarts the principle objective of the renewable portfolio standards, which is to reduce dependence on electricity generated from fossil fuels.’’

Methane is a greenhouse gas that is more than 20 times as potent as carbon dioxide, which the Obama administration is trying to curb by a proposed rule on emissions from power plants. Backers of the bill say if the landfill projects are closed down, the methane would simply escape into the atmosphere.