Five Important Questions Facing the Energy Industry in the Coming Year

Tom Johnson | January 5, 2015 | Energy & Environment
Many of the issues are familiar but resolving them in 2015 could recharge NJ’s power sector

natural gas pipeline
In the coming year, the state faces major decisions on energy issues that will affect residents and businesses, some of which regulatory officials and policymakers have struggled to resolve for years.

They include curbing some of the highest energy costs in the nation; creating a system to make the power grid less vulnerable to outages during extreme weather; and determining the right mix of clean energy sources, such as solar and wind, and more conventional power plants, primarily those fueled by new supplies of cheap natural gas.

Most of those policies reflect choices made by the Christie administration, but to a large extent have yet to be realized. At the same time, the energy sector is rapidly changing from the traditional deliverer of the bulk of electricity to customers to one increasingly reliant on distributed generation, such as solar systems and smaller power plants to provide power to local manufacturers.

What that portends for New Jersey and the reliability of the energy grid and what it means to business and residential energy bills remains uncertain. Here are several questions, the answers to which could determine the outcome:

How will changes in generation and distribution affect the power sector?

In the recent past, installation of new solar systems has been responsible for the greatest increase in generation of electricity. In other states, electricity from wind systems also is growing. The state’s gas and electric utilities also face diminishing revenue based on mandates to cut energy consumption. While some utilities, such as Public Service Electric & Gas, New Jersey Natural Gas, and South Jersey Gas, embrace those goals, the lost revenue poses problems for maintaining the reliability of the power grid. That may lead to changes in how utilities recover those costs from customers without being penalized for promoting clean energy projects and energy efficiency.

How big a rate cut do customers of Jersey Central Power & Light get?

The almost three-year-old rate case involving the state’s second-largest electric utility may finally get decided this spring. An administrative law court judge is expected to issue a decision by Friday, unless a fourth extension is granted. Then the issue will be taken up by the New Jersey Board of Public Utilities, which can decide to accept, modify, or reject the court’s decision. In this case, both the BPU and the state Division of Rate Counsel are largely on the same page, saying the utility’s rates should be cut by at least $200 million. By some estimates, it could reduce utility bills by one-third to customers.

Will the expansion of natural gas pipelines continue in New Jersey?

Probably, despite growing protests of residents and environmentalists. As many as 11 new pipeline projects have either been proposed or are under construction in New Jersey. Most of them deliver cheaper natural gas from the Marcellus Shale formations in Pennsylvania and neighboring states, a step that has led to much-lower heating bills for consumers. The Christie administration has been a strong proponent of building new natural gas pipelines as a means of reducing energy bills for residents and businesses.

What will NJ do to comply with tough new federal mandates to curb greenhouse gases?

The Obama administration is proposing new rules to eliminate pollution that contributes to global climate change — a strategy that New Jersey endorsed under a law enacted by former Gov. Jon Corzine. The state Department of Environmental Protection does not like the proposal, calling it incomplete, needlessly complex, and impossible to implement in a letter from DEP Commissioner Bob Martin to the U.S. Environmental Protection Agency. The state claims it has cut carbon dioxide emissions by one-third, but that is a long way from the 80 percent reduction by 2050 required under the law signed by Corzine.

How will New Jersey meet its aggressive goals to promote renewable energy?

After a slump, the state’s solar sector is coming back. But offshore wind is still in the doldrums, and no closer to the goal of developing 1,100 megawatts by 2020. No project has been approved yet, and a small pilot program to build an offshore wind farm three miles from the Atlantic Coast was once again rejected by the BPU late last year. Proponents of the technology fear New Jersey, once considered a leader among Eastern Seaboard states in developing offshore wind, will lose the benefits that a robust industry could deliver in terms of a green economy.