Manufacturers Coalition Urges $100M Rollback in Clean-Energy Subsidies

Tom Johnson | December 3, 2014 | Energy & Environment
Group argues state consistently collects more subsidies than it can spend, which leads to money being diverted to fill budget holes

energy efficiency
The state is being urged to slash $100 million annually from a surcharge on customer gas and electric bills, a burden that falls most heavily on big manufacturers that use large amounts of energy, but also affects homeowners.

In a filing with the state Board of Public Utilities, the New Jersey Large Energy Users Coalition argued that the state repeatedly has collected more money from ratepayers for a variety of energy programs than it can spend in any given year.

The result has led the Christie administration and the Legislature to divert those unspent funds to help stave off deficits in the state budget amounting to more than $1 billion in the past few years.

The issue is one that has been raised not only by the coalition, but also by the New Jersey Division of Rate Counsel and some lawmakers in recent years. They say by raising more money from ratepayers each year, it only invites the government to plug budget holes wherever there is a surplus of funds available.

“If you have a surplus, you either reduce it or you give it back to ratepayers,’’ said Steven Goldenberg, an attorney representing the coalition.

The surcharges cost some of Goldenberg’s clients more than $1 million a year. For residential customers, the charge based on 2013 records ranges from $45 to $68 a year on electricity bills and from $63 to $83 annually for gas customers. Those costs may have dropped, however, because of cheaper natural gas supplies available in neighboring states, like Pennsylvania.

In the filing to the BPU, the coalition said of the proposed $100 million reduction, “This could in turn, significantly reduce the size of the SBC (societal benefits charge), provide needed relief to all ratepayers, and assure the future of the SBC benefits are devoted to its intended purposes.”

The surcharge on the bill funds a variety of programs, but the bulk of the money goes to clean-energy projects and an effort to lower energy bills for low-income customers by limiting their payments to only a fraction of their household income.

It also is used to clean up old contaminated waste sites from former coal-gasification plants and to pay for the decommissioning of nuclear power plants.

“The issues relating to the chronic over-budgeting of the CEP (Clean Energy Program) are far more serious and have significant long-term costs and implications for all ratepayers,’’ according to the filing.

The Christie administration has talked about reducing the SBC charge and replacing it with a revolving loan fund that would funnel money to clean-energy projects. Many in the industry, however, question whether such a financing arrangement would promote more clean-energy projects.

With New Jersey burdened by some of the highest energy costs in the nation, the Christie administration has proposed a series of steps to reduce bills for consumers and businesses. Some have not been so successful. One proposal was going to award subsidies to developers to build new power plants in New Jersey, a strategy it thought would reduce electric bills. So far, however, federal courts have struck down the initiative, which was backed by the Democratic-controlled Legislature.