State Board to Examine How to Curb Electricity Costs for Residents, Businesses

Tom Johnson | March 30, 2020 | Energy & Environment
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The state is launching an investigation into how to buy electricity for its residents and businesses, a step that may determine whether and how New Jersey moves forward with the Murphy administration’s ambitious clean energy program.

The decision, made at a bimonthly meeting of the state Board of Public Utilities this past Friday, is in response to a ruling by federal energy regulators that New Jersey officials and clean energy advocates contend favors fossil fuel generation, and makes solar and wind power more expensive.

The order, issued by the Federal Energy Regulatory Commission (FERC) in December, could potentially hinder New Jersey’s efforts to transition to 100% clean energy, critics say, and spike prices that consumers pay to assure there is enough electricity to keep the lights on — even in times of peak demand.

But advocates view the revamped policy as a way of fixing the energy market, where proponents say subsidies for renewable energy and nuclear energy distort competition in the capacity market. That market, where generators bid to supply power to meet energy demand, has long been a bone of contention between New Jersey and regulators — primarily because of the higher prices consumers pay here than in other parts of the region.

BPU president Joseph Fiordaliso called the agency’s action an opportunity to achieve the state’s clean energy goals while potentially lowering costs to customers.

‘Taking control of our own resource mix’

“Taking control of our own resource mix may be the only way to stop the Trump administration’s attempts to prop up fossil fuels to the detriment of our clean energy program,’’ Fiordaliso said. “We will do everything in our power to prevent that from happening.’’

While not ruling out any options, the agency staff is expected to look at leaving the PJM Interconnection capacity market, establishing a statewide power authority, or establishing a state Clean Energy Standard where energy suppliers must commit to a higher percentage of clean energy in winning bids to serve customers here. It hopes to finish the probe by year-end with a recommendation to the full, five-member commission.

As part of the ongoing debate about the FERC order, PJM Interconnection, the operator of the regional power grid, earlier this month submitted a filing to the federal agency detailing how it will comply with the directive. Generally, clean energy advocates said the proposal sought to address their concerns.

In New Jersey, the effect of the FERC order could disrupt the state’s efforts to shift to cleaner ways of producing electricity, according to BPU. In particular, it cited the state’s plans to build a robust offshore wind sector and to keep its carbon-free nuclear plants operating.

Impact on cap-and-trade program

In addition, staff indicated FERC’s order in December may also affect the Regional Greenhouse Gas Initiative, a cap-and-trade program involving power plants that New Jersey recently joined. Also, the FERC order may affect an annual auction the BPU conducts to purchase power for its customers who do not bother to switch energy suppliers.

“The board cannot sit idle while FERC considers rehearing and clarification,’’ the BPU decision noted, citing its own appeal for a rehearing of the issue. It also cited the state’s Energy Master Plan and its commitment to explore all possible options to ensure the state can realize a clean energy future at reasonable prices.

At least one analyst is skeptical the move will result in a significant shift in how the state procures the energy it needs. “You have to separate rhetoric from the reality in the end,’’ said Paul Patterson, an energy analyst with Glenrock Associates in New York. “They have talked about leaving PJM in the past.’’

“This federal rule is nothing more than a bailout for fossil fuel generation in the PJM electricity market, which will hurt New Jersey’s clean energy economy, increase costs for ratepayers, and increase dangerous fossil fuel pollution in our communities,’’ said Jeff Tittel, director of the New Jersey Sierra Club.