Questions Abound over Key Study of NJ’s Potential to Cut Energy Use

Utilities among those querying underpinnings of a study that could help to determine state’s energy efficiency policies

Credit: City Utilities
Electric meter (advanced)
A new draft analysis of the state’s potential to reduce energy use is raising more questions than it answers, at least based on feedback from utilities, energy efficiency firms, clean-energy advocates and others.

The study by Optimal Energy, expected to form the framework of a more comprehensive range of state policies to expand energy efficiency projects, suggests New Jersey could achieve significantly greater savings in electricity and gas use than currently — delivering billions of dollars in benefits to utility customers.

But, while generally endorsing the goals, utilities and others argued the draft study fails to supply critical data backing up some of its findings and recommendations, and in some instances, makes policy decisions that rightfully ought to be determined by the New Jersey Board of Public Utilities.

Several utilities also lamented the report does not spell out who will administer the energy efficiency programs. Under a Clean Energy Act signed by Gov. Phil Murphy a year ago, the onus of meeting new mandates to reduce electric use by 2 percent a year and gas use by 0.75 percent would be put on the utilities.

“If we are responsible for ensuring our programs facilitate the attainment of required savings targets, then we must be empowered to control the administration of our energy efficiency programs, and not compete with the OCE (Office of Clean Energy),’’ said Andrew Dembia, an attorney for New Jersey Natural Gas.

Other utilities objected to the elimination of a provision allowing energy efficiency investments to be amortized over time, a step Public Service Electric & Gas suggested could lead to rate shock for customers.

More problematic were fears by the utilities that they would not recover all lost sales revenues from customers due to their energy efficiency programs even though the Clean Energy Act clearly entitles them to be made whole for lost revenue.

One size may not fit all

Atlantic City Electric argued the state should not adopt a one-size-fits-all approach to establishing energy-savings targets, a criticism echoed by Rate Counsel Stefanie Brand.
Utilities differ widely in amount of residential and commercial/industrial usage, Brand said, as well as how much various companies have invested in energy efficiency in the past.

“To suggest that the exact same gas and electricity savings and peak reduction targets are appropriate for all of New Jersey’s utilities on a percentage basis does not comport with these realities,’’ Brand said.

Another concern about the study is its assumption that advanced metering infrastructure (AMI) would be widely available in New Jersey over the next decade. That assumption is “not certain, or even planned,’’ according to a brief filed on behalf of five major environmental organizations.

Nevertheless, the groups — the Natural Resources Defense Council, New Jersey Conservation Foundation, the League of Conservation Voters of New Jersey, the Sierra Club and Environmental Defense Fund — found the preliminary findings encouraging.

The findings “forecasted a 21 percent reduction in energy demand by 2029, which, if achieved, will help the state reach its climate goals, 50 percent clean energy by 2030.’’

Lime Energy, a Newark-based energy consulting company, also endorsed the study. “Our business model and approach to the market can be very supportive of pushing smaller, harder-to-reach commercial customers toward significant contributions to the CEA efficiency targets, while driving job growth and decarbonization in the state,’’ the company said.

Overall, most commenters wanted to extend opportunities for stakeholder input into the draft, which was only made public on May 9. The public comment period ended a week later, and the BPU could act on the report as early as next Tuesday, during its next scheduled meeting.