April 9, 2014

Draft Bill Sets Aggressive Goals for Renewable Energy, Power Consumption

Measure would boost NJ's reliance on renewable energy to 80 percent by 2050, slash energy consumption by 30 percent at same time.

A yet-to-be-made public bill could radically change New Jersey’s energy future by sharply increasing the state’s reliance on renewable energy at the same time that it decreases energy consumption by 30 percent by 2050.

The draft legislation, still to be introduced, drew dozens of lobbyists, energy executives, and others to a private stakeholders meeting Monday afternoon in a first-floor committee room in the Statehouse Annex. Little was decided and another session is scheduled for May 6.

Many of the concepts in the bill have been tossed around by lawmakers and its proponents for months, including a proposal to increase how much of the state’s electricity is produced by renewable sources, such as solar and wind. The draft, dubbed the "Renewable Energy Transition Act," also contains provisions to fundamentally shift how New Jersey energy markets work.

If it's ever enacted--a very big question at this point--the measure would increase the state’s reliance on renewable energy to 80 percent by 2050. The state’s current goal, outlined in its Energy Master Plan, calls for 22.5 percent of the state’s electricity to come from renewable sources by 2020.

The bill is likely to draw heated opposition from the business community, which already fears that the state’s efforts to promote renewable energy will spike electric bills for consumers and businesses now stuck with some of the highest power costs in the nation. At this point, renewable energy is much more expensive than conventional ways of producing electricity, especially from natural-gas-powered plants.

A major impetus behind the bill, sponsored by Sen. Bob Smith (D-Middlesex), the influential chairman of the Senate Environment and Energy Committee, is a belief among clean-energy advocates and environmentalists that the state is making little progress in reducing greenhouse gas emissions that contribute to global climate change.

Under the Global Warming Response Act passed during the administration of former Gov. Jon Corzine, New Jersey set a goal to reduce greenhouse gas emissions by 80 percent by 2050. To achieve that target, it relies on the state’s Energy Master Plan; a regional program to reduce greenhouse gas emissions, which the Christie administration pulled out of; and a program to usher in zero-emission vehicles, another proposal whose fate is uncertain.

“Really nothing has been done to accomplish the goal of 80 percent, which right now is being largely ignored,’’ said William Potter, an energy lawyer who attended the meeting. (Full disclosure: Potter is an occasional columnist for NJ Spotlight.) ‘’In light of increased evidence of global climate change, it is time to act. We’ve got to start moving ahead on global climate change before it’s too late,’’ he said.

The proposed bill aims to address that problem. One of its provisions would require the state to reduce energy consumption by 20 percent by 2025 and by 30 percent by 2050. In this week’s meeting, there was near unanimous consensus that the best way to address global climate change is to reduce energy consumption, according to participants.

“It’s by far the most energy efficiency goal ever considered in New Jersey. What’s intended is to be a thorough blueprint to get to a renewable future in New Jersey,’’ said Lyle Rawlings, president of the Mid-Atlantic Solar Energy Industries Association and a prime proponent of the bill.

While the bill does not yet include a provision for "decoupling," Smith says the only way to persuade utilities to get customers to reduce energy usage will be to decouple rates as some states like California have done, making sure that savings for gas and electricity ratepayers will not hurt a power company's bottom line.

Decoupling is a rate mechanism that separates the utility’s fixed cost recovery for maintaining its system from the amount of electricity or gas it sells to customers. Instead, it would be typically based on the number of customers it serves.

Smith argued that such changes are needed to encourage utilities to undertake energy conservation projects that would reduce electric usage. “All of the incentives now are in the wrong direction,’’ he said.

Andrew Hendry, president and chief executive officer of the New Jersey Utilities Association, said it is too early for its members to decide whether the proposed decoupling provision would work, since they haven’t seen any language detailing the idea.

“Even if fewer people are using the grid, the costs of maintaining it are still there,’’ Hendry said. “We need to make sure we’re looking at the cost to ratepayers. ’’

How realistic the 80 percent renewable goal is will likely spark a lot of debate. New Jersey’s once robust solar sector has slowed to crawl. The state’s goal of building 1,100 megawatts of offshore wind by 2020 is not close to being realized. The bill calls for 425 megawatts of new solar capacity to be installed each year in New Jersey by 2017, a target some view as optimistic.

The measure also calls on the New Jersey Board of Public Utilities to encourage the development of electricity storage, a technology that is still in a nascent state.

Jeff Tittel, director of the New Jersey Sierra Club, acknowledged the bill is a work in progress, but added “we need to plan for New Jersey’s long-term energy needs.’’

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