Move quickly … but correctly: BPU offshore wind energy hearing shows clash of interests

N.J. needs to take advantage of expiring incentives, but at what cost to long-term planning, business

By Anjalee Khemlani
Trenton | Jul 20, 2018 at 7:20 am

The state is faced with striking a balance between setting rules for offshore wind energy production quickly and a robust long-term strategy.

At least, that’s how the first public hearing by the Board of Public Utilities went Thursday.

The hearing, which will help the BPU set regulations, saw stakeholders battle for a piece of the new industry’s pie — all while trying to figure out how it will impact business.

Gov. Phil Murphy has set a goal of 3,500 megawatts of offshore wind production by 2030. The BPU is figuring out what to include when it solicits bids for the first 1,100 megawatts.

Most important for the business community is the cost of the new energy source that will be reflected in electricity bills.

Commercial and industry customers consume 60 percent of the electricity in the state, according to the New Jersey Business & Industry Association’s Chrissy Buteas.

“We also represent some of the largest energy users in the state, so implications on prices are of great concern,” she said. “As such, we need to balance the environmental and energy impacts to the ratepayers.

“With some of the highest energy rates in the country, we need to encourage the board to be mindful of the impacts on the ratepayer. As such, competition, results from your cost-benefit analysis and transparency are key to keeping the ratepayer treated fairly in this negotiation.”

Robert Gibbs, director of government and regulatory affairs for Direct Energy, shared similar testimony.

“The board really needs to consider the business community, the customers that are going to be paying for this,” he said.

While the cost to an average residential consumer is likely a few dollars a month extra, the monthly addition for commercial customers could be hundreds of thousands or even millions of dollars, Gibbs said.

Gibbs made it clear he’s not against offshore wind energy. In fact, he said, it’s the opposite.

“Offshore wind: I’m a huge fan … we applaud the goals,” he said. “Climate change is real. But, with all the other costs we are seeing around the country and the state, we really have to be mindful of the customer here.”

Representatives of two of the biggest players so far in the state — Ørsted and Deepwater Wind — urged the state to think long-term in its planning.

Elisabeth-Anne Treseder, a regulatory adviser for Ørsted, also cautioned that federal credits — which would help ease the burden on ratepayers — will expire in 2019, which is why the state must move quickly.

Former Gov. Jim Florio agreed. He stressed the importance of competition and quick action to take advantage of federal credits — especially since they are unlikely to be renewed under President Donald Trump’s administration.

“Federal tax credits expire next year; we don’t want that to happen before we take credit of them,” he said.

Florio also said the state should encourage more companies, rather than have a monopoly.

Treseder said the state should allow companies to bid for the whole 1,100 megawatts, either in whole or through multiple bids.

“We’ve also seen, from our experience in Europe, that starting a new market with a robust initial procurement is incredibly helpful in terms of helping supply chain to actually mobilize and localize to the market,” she said. “If you begin in a more gradual manner, it really just slows down the localization of the supply chain.

“Supply chain needs a certain amount of scale in order to … move to a new market such as this. We also feel that the New Jersey BPU should really emphasize the lowest cost of energy to the greatest extent possible for these bids.”

Some stakeholders suggested smaller bids, such as 400 megawatts each, allowing more competition.

Others also suggested separating the tasks — production, development and construction — in order to allow even greater participation, competition and provide more industries the opportunity to grow.

Anbaric‘s Clarke Bruno said the original law, signed by Gov. Chris Christie in 2011, defines eligible bidders as those who generate wind. This would disqualify Anbaric, which connects the energy source to the shore, and would lay the groundwork for monopolies.

“This prohibition of an entire category of companies from simply bidding makes no sense and limits the responses for the state to review in order to pick the lowest cost and best solution,” Bruno said.

The two hours of passionate testimony provided insight into the task ahead for the BPU, and the various factors it will have to weigh.

Florio said that, no matter what, the state is headed in the right direction.

“I’m very enthusiastic about Gov. Murphy’s enthusiasm for offshore wind,” he said. “Offshore wind is very important for us as an energy source that is clean, good for the environment and, most importantly, New Jersey wind energy will create a whole new industry.

“The job opportunities are not fully appreciated yet, by everyone.”

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Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem