Department of Environment Commissioner Bob Martin yesterday said the state’s efforts to build offshore wind farms will increase electric bills for consumers. But the expected job gains from creating a robust new industry will offset the higher rates.
Martin testified before the Senate Budget and Appropriations Committee at its request only two days after the panel had grudgingly approved a bill to create a funding mechanism that would help offshore wind developers secure the financing they need to build their projects, which by some estimates could run more than $7 billion.
His appearance seemed to underscore growing concern among lawmakers over the potential rate impact of pursuing an aggressive state policy of promoting more expensive renewable energy technologies, such as solar and wind power. The offshore wind bill, sponsored by Senate President Stephen Sweeney (D-Gloucester) and Senate Minority Leader Tom Kean (R-Union) and strongly backed by the Christie administration, is in position to win approval from the Senate next week, even though it was introduced less than three weeks ago.
Sen. Paul Sarlo (D-Bergen), the chairman of the budget panel, reflected lawmakers' fears about the cost to consumers when he told Martin: “My concern is very simple. The cost of this energy is quite expensive.’’ In Massachusetts, Sarlo noted, the Cape Wind offshore wind project is now expected to cost consumers there $200 million more on their electric bills in the first year.
"Is it expensive? Yes," replied Martin, but he argued the cost of wind power is dramatically less than the cost of solar electricity, which is running about 60 to 70 cents a kilowatt hour. Offshore wind is expected to cost in the range of 18 to 24 cents a kilowatt hour, Martin said. Today, the cost of electricity paid by New Jersey consumers, which includes a fraction from renewable energy sources, runs about 11 cents a kilowatt hour.
Martin defended the offshore wind bill, saying it provides a jump start for the state to get out in front of other states, which also are looking to attract green jobs by attracting wind turbine manufacturers to their states. New Jersey is well positioned to be a leader in the industry because it already has done a comprehensive environmental study assessing impacts on marine, fish and bird life; it has four companies interested in building offshore wind farms; and it has been talking to a wind turbine manufacturer about locating here, Martin said.
The offshore wind bill is crucial to the effort, according to offshore wind advocates. The bill sets up a process under which developers earn offshore renewable energy credits for each megawatt of electricity generated by the wind farms. The state Board of Public Utilities would establish a fixed price for the credits over 20 years, with adjustments for inflation. New Jersey’s electric utilities would purchase the credits from the developers and the price would be reflected in power prices passed on to ratepayers.
Sen. Jeff Van Drew (D- Cape May) argued in the long run, offshore wind will be cheaper because the fossil fuels powering most generating stations will only continue to rise in cost while wind will always be free. "At the end of the day, it will not only save us money, but we will have a cleaner environment," he said.
Business lobbyists, who have led the way in cautioning on offshore wind, were not convinced. "I'm still concerned that the cost may be significant," said Hal Bozarth, executive director of the Chemistry Industry Council of New Jersey. "We want our rates to go down, not up."
Bozarth also questioned just how many jobs would be created by promoting offshore wind farms. "The economic studies I’ve seen indicate on the wind farms side of things, you don’t create a lot of jobs," he said.