State-Sanctioned Deal Moves Energy Resiliency Bank Closer to Reality

Tom Johnson | July 24, 2014 | Energy & Environment
Low-interest loans could help keep power on at critical facilities even if power grid is knocked out of service

Credit: Amanda Brown
Jeanne Fox, commissioner of the NJ BPU.
The state yesterday approved an agreement between the Board of Public Utilities and the New Jersey Economic Development Authority to run a bank to fund projects to keep power on at hospitals and other critical facilities during bad storms, which often cause widespread outages on the power grid.

The proposal is initially funded by a $200 million grant from the federal government, but could be supplemented by other money raised from utility customers through a surcharge on their gas and electric bills.

Most of the money would be allocated through low-interest loans. These would be repaid by facilities that build distributed-generation projects to retain power even if they are no longer getting electricity from the grid, which occurred frequently throughout the state during Hurricane Sandy.

Hospitals had to move patients when power failed, and 94 wastewater treatment plants also lost electricity, resulting in billions of gallons of sewage being dumped into the state’s waterways, according to Michael Winka, a senior official with the BPU. Half of the state’s water-supply facilities also were left without power, leading to many boil-water advisories, he said.

“This is going to happen again so we have to prepare for it,’’ he told the BPU commissioners at their monthly meeting in Trenton.

BPU President Diane Solomon agreed. “The Christie administration has made the establishment of this bank a priority,’’ she said, adding that it could minimize the impact of widespread outages due to major storms.

The projects would include small power generating facilities, such as combined heat and power (CHP) to supply electricity if outages occur. It could also involve fuel cells (which generate power by converting hydrogen into electricity) and solar systems with battery storage that would still run even if the grid goes down.

“Distributed energy resources proved extremely resilient following superstorm Sandy. Unfortunately, due to high initial costs, many critical facilities do not have these energy-resilient solutions in place,’’ said Michele Brown, chief executive officer of the New Jersey EDA.

Initially, under a plan adopted by the state, the bank will be focused on providing capital, both low-interest loans and grants, to water and wastewater treatment plants and hospitals. Subsequent funding will be directed toward transportation and transit networks, emergency response facilities, and schools.

State officials called the new bank the first of its kind in the nation to focus on resilience, which has been a focus of BPU since Sandy. It has called on utilities to spend money to prevent widespread outages, approving a $1.2 billion program earlier this year allowing Public Service Electric & Gas to upgrade its electric and gas infrastructure.

Yesterday, the agency also approved plans by New Jersey Natural Gas to spend $102.5 million to provide new gas lines to customers and other projects. It also gave Elizabethtown Gas the go-ahead to increase rates by $13 million to upgrade its system.

The agency has allocated $150 million in funds from state fiscal budget years 2015 through 2018 to help support the resiliency bank, but even commissioners questioned whether the money– financed by a surcharge on utility customers’ bills — would be available to finance the resiliency projects.

“I’m really hopeful this is the equivalent of what we did to solar 12 years ago,’’ said BPU Commissioner Jeanne Fox, referring to the agency’s efforts to promote solar. At one time New Jersey was second only to California in the number of solar installations. It now has more than 30,000 solar systems.

“I am also concerned that the Legislature and administration will continue to raid the SBC (societal benefit charges) to prevent the bank from growing,’’ she said.