BPU Hands Off Energy Resilience Bank to Economic Development Authority

Tom Johnson | June 18, 2015 | Energy & Environment
Management change should help get projects approved -- and funds disbursed -- more quickly

Credit: Amanda Brown
Joseph Fiordaliso, president of the BPU
The state is streamlining a new initiative aimed at allowing critical facilities like sewage-treatment plants and drinking-water systems to keep operating even when there are widespread power outages.

In a unanimous vote yesterday, the state Board of Public Utilities handed over control of the recently created Energy Resilience Bank to the New Jersey Economic Development Authority, relinquishing its say on which projects move forward. The BPU will remain as a technical advisor to the EDA.

The move comes at a time when many facilities — and even some commissioners — are frustrated by the fact that no projects have received funding to date that would provide enough financial incentive to develop alternative ways of producing electricity if the grid fails. The bank was established last October.

For the most part, the projects would rely on smaller, on-site power plants to generate electricity and heat, as well as fuel cells and solar systems that could run in the event of widespread blackouts, such as those that occurred during Hurricane Sandy.

The bank, seeded with $200 million from the U.S. Department of Housing and Urban Development, hopes to approve at least two projects this year, but has up to 30 projects in the pipeline. It plans to begin accepting applications from hospitals and transportation hubs this fall.

“We would all like to see a little bit more action,’’ said BPU Commissioner Joseph Fiordaliso, referring to the lack of approval of projects.

Tom Walker, a BPU staffer who was deputy director of the bank, said the move to streamline operations should get money on the streets faster.

[related]BPU President Richard Mroz agreed. “This change will really streamline the process,’’ he said. The agency will retain some role in funding energy-resilience initiatives under a new clean-energy budget approved yesterday by the board. The budget allocates $10 million out of its proposed $357 million for such projects.

Still, the bank faces hurdles in doling out the funds — initially $65 million for wastewater treatment plants and water systems — because projects must clear guidelines established by HUD, according to Mitch Carpen, executive director of the bank. “We’re setting this up for the long run,’’ he said.

The state has good reason to focus on those facilities. When sewage-treatment plants failed during Sandy, it resulted in billions of gallons of raw sewage being dumped into the state’s waterways. When water systems lost power, it led to 37 boil-water advisories. Hospitals, too, lost power, leading to evacuation of two facilities.

A longer-term problem for the bank is that the number of facilities seeking to take advantage of the initial funding allocation of $200 million far exceeds projections of what it would cost to make all these systems more resilient. By Carpen’s estimate, it could top $4 billion.

Some of the allocations would replenish the bank to some extent because the program — at least for now — relies on low-interest loans to finance projects that it funds.