NJ Falling Behind Other States in Energy-Efficiency Efforts, Report Says

Tom Johnson | October 27, 2015 | Energy & Environment
State slips two spots to 21st, according to scorecard, loses points for clinging to old business model for utilities, diverting clean-energy funds

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When it comes to saving residential and business customers money by reducing energy use and boosting energy efficiency, New Jersey continues to lag behind other states, a new study suggests.

In a state-by-state ranking of energy-savings efforts by the American Council for an Energy-Efficient Economy, New Jersey slipped [link:http://aceee.org/press/2015/10/aceee-state-scorecard-massachusetts|
two spots to 21st], down from the previous year’s annual scorecard.

The results of the report, done with the support of the U.S. Department of Energy, reflect what many clean-energy advocates, utility executives, and even
some state officials have repeatedly said: New Jersey needs to be more aggressive in promoting energy efficiency.

How? It needs to change the traditional business model used by utilities to get them to invest in energy-savings programs. It needs to stop raiding funds for energy efficiency programs to fill holes in the state budget. Like other states, it should consider adopting mandatory targets to reduce energy use.

Besides lowering bills for consumers and businesses and cutting energy use, energy-efficiency programs reduce pollution from power plants, hold down emissions contributing to global warming, and slow major investments to build new generating units or high-voltage transmission lines.

But the study suggests that New Jersey is not doing as much as other states, particularly when it comes to convincing utilities to invest in helping customers save money by reducing their use of electricity and gas.

“In the utility sector, there’s a lot of opportunity for savings,’’ said Annie Gallieo, policy advisor and lead author for ACEEE’s State Energy Efficiency Scorecard.

To a large extent, it is happening in states where new business models have been adopted that align a utility’s interests with those of customers and policymakers, according to Steve Nadel, executive director of ACEEE. In the past year alone, utilities across the U.S. invested more than $7 billion in energy efficiency, he said.

Many of those states have adopted so-called decoupling provisions, which protect utilities from falling revenue by decreased sales that are the result of helping customers reduce energy consumption.

“We think it’s the biggest issue,’’ said Jess Melanson, director of energy services for Public Service Electric & Gas, the most aggressive utility in the state in invest in energy efficiency. “If you are hurt financially, then utilities have the wrong incentives. The right incentives will make it happen.’’

New Jersey looked at that issue by setting up a legislative task force last year, but it was unable to reach a consensus or even recommend a possible strategy to lawmakers.

To achieve greater energy efficiency, Melanson argued there needs to be deep penetration in the mass market to drive savings. “Utilities can help do that,’’ he said.

But that may not be enough to reduce energy consumption, Gallieo said. The states that ranked highest in energy efficiency all have mandatory long-term energy-savings goals in place. The state Legislature has considered establishing an energy-efficiency portfolio requiring mandatory reductions in energy use, but it never has moved close to final approval.

“As other states in the region significantly ramp up programs year after year, to keep up with its peer states, New Jersey will need to ramp up energy-savings levels and adopt and enforce long-term energy-efficiency targets,’’ the report concluded.

Gallieo also noted the diversion of funds for clean energy to balance the state budget. “It’s not able to devote the resources it needs for energy efficiency programs,’’ she said.

More than $1 billion in clean-energy funds raised from utility ratepayers has been used by the Legislature and Christie administration in the past six years to plug deficits in the annual state budget.

New Jersey has not moved forward while other states have passed it, said Jeff Tittel, director of the New Jersey Sierra Club. “It’s a failure to have a cohesive policy in place to save energy.”