Scorecard Ranks NJ 24th in Energy Efficiency, Down 3 Spots from Prior Year

Tom Johnson | September 30, 2016 | Energy & Environment
Among reasons for state’s slide, diversion of clean-energy funds and utility business model that does not encourage investment in energy efficiency

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While many states are making strides to reduce energy use, New Jersey continues to lag behind others in using energy more efficiently, according to a new national analysis.

New Jersey fell to 24th in the nation in energy efficiency, slipping three spots, according to a scorecard compiled by the American Council for an Energy Efficient Economy with the support of the U.S. Department of Energy. Less than a decade ago, the state was ranked seventh in terms of energy efficiency.

Clean-energy advocates often cite the annual study as justification behind a push for more aggressive policies and investments that would allow businesses and consumers to use energy more efficiently — a win-win proposition that would cut energy bills and reduce pollution.

The factors causing the state to lose ground are all too familiar to those who want the state to put a higher priority on energy efficiency. The analysis cited diversion of funds to promote energy savings; lack of a mandatory target to reduce energy use; and an existing utility business model that does not encourage investment in energy efficiency.

“Sadly, this is a broken record,’’ lamented Doug O’Malley, director of Environment New Jersey. “The road to becoming more energy efficient is obvious: stop raiding clean-energy funds and adopt an energy efficiency portfolio standard.’’

But the New Jersey Board of Public Utilities questioned the assumptions made in the analysis and defended its efforts in promoting energy efficiency.

In a statement, the agency said the state has a decade-and-a-half history of advancing energy efficiency, having invested approximately $2.58 billion over that time — a fact the council gives no weight. Half the state’s investment in energy efficiency has been during the Christie administration.

“We put first the interests of New Jersey residents and how they can realize cost savings and energy reductions in their own homes, particularly those least able to afford them,’’ said Greg Reinert, a BPU spokesman.

But since Gov. Chris Christie took office seven years ago, about $1.3 billion in clean-energy funds have been diverted from the program to pay for other uses, ranging from plugging deficits in annual budgets to paying energy bills at state facilities. A surcharge on consumer and business electric and gas bills is supposed to fund the clean-energy program.

The New Jersey Sierra Club formally asked the state Board of Public Utilities to establish a statewide energy efficiency standard, which would set binding mandates to reduce energy consumption by utility customers, a petition rejected by the agency.

“The states that do rank high do have a mandatory energy efficiency standard,’’ noted Weston Berg, a research analyst for ACEEE.

Jeff Tittel, director of the state’s Sierra Club chapter, noted that the rankings are not as important as the consequences of not moving forward on some of the initiatives to reduce energy use. “We’re getting more pollution that we don’t need and are losing jobs that could otherwise be created,’’ he said.

Many other states have revised the business models for utilities, creating incentives to invest in energy efficiency programs. In the past, any energy savings reaped by customers would erode the utilities revenue, creating a disincentive to invest in programs to cut energy consumption.

More than two dozen states have adopted a regulatory tool dubbed “decoupling,’’ which ensures utilities bring in enough revenue to maintain the reliability of their infrastructure no matter how much gas and electricity they sell. A legislative task force is examining how such a system could work in New Jersey but is far from reaching a consensus.

“State policies are increasingly encouraging utilities to invest in cost-effective efficiency, prompting them to adopt business models that align their interests with those of customers and policymakers,’’ said Steve Nadel, executive director of ACEEE.

New Jersey was one of 16 states to fall in the council’s rankings. Overall, 20 states, including California, which finished second in the energy efficiency rankings behind Massachusetts, improved their performance in reducing energy, according to the scorecard.

One area in which New Jersey was cited as doing well involved transportation policies. In particular, the scorecard cited the state’s rules requiring automakers to reduce emissions from fleet-wide greenhouse-gas emissions from vehicles.