State Urged to Consider Costs for All Utility Customers in Energy Plan

Tom Johnson | September 9, 2019 | Energy & Environment
Rate Counsel’s filing with BPU emphasizes the importance of a rate impact analysis for the state’s residential, commercial and industrial customers

Stefanie Brand, director of the Division of Rate Counsel
As the state finalizes its energy master plan (EMP), it needs to gauge how transitioning to a 100 percent clean energy economy will impact all utility customers, according to New Jersey’s Division of the Rate Counsel.

In comments filed with the state Board of Public Utilities, Rate Counsel director Stefanie Brand told the agency her office is concerned that new projections on how it would achieve those goals do not include a rate impact analysis.

The draft modeling scenarios, which are being prepared by a BPU consultant, are expected to influence recommendations to be made in a final plan by the end of the year. It will likely determine what offshore wind, solar, and energy efficiency goals are necessary to achieve a clean energy economy by 2050.

That overall goal, advanced by Gov. Phil Murphy, has been widely embraced by clean-energy advocates, but business and industrial interests have said they fear it could boost utility bills in a high-cost energy state.

What are the prospects for natural gas?

Others question how the state is going to completely phase out natural gas, which now provides more than 40 percent of the electricity in the state and heats about 85 percent of homes and businesses. Cheap gas also has lowered costs for customers as well as manufacturers.

It also comes at a time when ratepayers are now paying up to $300 million a year to keep the state’s three nuclear power plants from closing prematurely. In initial modeling done by the Rocky Mountain Institute, the BPU consultant’s projections assume those facilities will continue to operate beyond their current permits, which begin to expire in 2036.

As the state shifts to cleaner energy sources, it also is expected to subsidize offshore wind farms, new solar facilities, and homes and businesses’ efforts to reduce energy use. “The rate impacts of the various scenarios that are being modeled are of utmost importance,’’ Brand said.

“While the modeling analysis will emphasize ‘least cost,’ the impacts of these costs on New Jersey households, businesses and industries has to be examined in a comprehensive fashion,’’ Brand argued.

At a minimum, staff consultants should examine average rate impacts across three primary customer classes — residential, commercial and industrial — according to the filing.

Considering different energy scenarios

At the same time, the modeling ought to include bill impacts by examining how changes in energy usage may arise from the various options included in the final energy master plan, the Rate Counsel argued.

“While rates are likely to increase from most of the EMP scenarios being examined, there could be reductions in energy uses arising from energy switching or fuel switching activities that could lower overall energy bills,’’ the filing said.

So far, environmental groups have mostly questioned why the draft energy plan does not include a moratorium on new fossil fuel plants. A rash of new pipeline and gas-fired power plants seeking approval in New Jersey are driving this plea.

In hearings later this week, business groups are expected to weigh in and voice concerns about shifting away from cheap natural gas, which has been a boon to consumers and the state’s manufacturing community in recent years.