Questions about cost remain after release of New Jersey clean energy study

By: - August 18, 2022 7:09 am

Responding to critics charging that the new study does not truly capture the cost of New Jersey's clean energy push, Joe Fiordaliso, the Board of Public Utilities president, said the costs of inaction could be higher. (Photo by Scott Eisen/Getty Images)

A state utilities board Wednesday approved a 124-page study estimating how the state’s transition to renewable energy will affect utility rates, but critics and board staff said more research would be needed to ascertain the true cost of the state’s energy master plan.

Whether a resident changes their energy consumption, the costs of electrification, and even the amount of federal aid New Jersey gets from a recent bill signed into law by President Biden will all play a role in determining whether an individual’s energy costs go up or down, officials said Wednesday.

The study, drafted by consulting firm Brattle Group, finds the state’s shift to renewables would cut utility rates for most consumers below 2020 levels, but the study did not examine capital costs associated with a shift to greener energy sources or costs related to taxpayer-funded subsidies and programs.

Despite critics’ complaints that the study fails to offer a clear picture of how much the state’s clean energy push will cost ratepayers, Joe Fiordaliso, the Board of Public Utilities president, said the costs of inaction could be higher.

“I think it’s important for us as a society to determine what the costs will be if we do nothing, and if we do nothing, that’s what we’re going to be judged on by future generations when they have no place to live,” Fiordaliso said.

The price estimates in the study will be used to inform policy decisions as lawmakers move to codify portions of the master plan into statute, though critics’ questions about the study’s scope likely mean another round of research will be done.

New Jersey’s energy master plan is a series of policy recommendations for the state to obtain 100% of its energy from renewable sources by 2050.

The study examined energy costs in three scenarios: existing clean energy statutes and rules only; rules that would be put into place by the energy master plan’s least-cost pathway; and a more ambitious renewables plan that would see New Jersey draw all of its energy from renewable sources by 2035 instead of 2050.

In each of the three scenarios, electrifying buildings would bring 2030 heating costs below 2020 levels, Brattle found, adding that residents who made no move to adopt renewable sources were likely to see a 16% rise in energy costs by 2030, with about half the increase driven by natural gas price increases, Ben Witherell, the Board of Public Utilities’ chief economist, said at the board’s Wednesday meeting.

But the gains would not be universal, and low-income residents would likely need state assistance to see savings from a shift to renewables.

“Low-income customers often spend more of their annual household budget on energy needs and historically have less opportunity to participate in clean energy solutions,” Witherell said. “It’ll be important for the board to expand existing programs designed to assist low-income customers and to create new opportunities — like community solar, for example — to ensure all New Jerseyans can benefit from the transition to 100% clean energy.”

More questions over cost

The board’s approval of the Brattle study wasn’t unanimous. Commissioner Dianne Solomon, the only one of the four commissioners present to vote against the report, warned the exclusion of capital and taxpayer costs from the study’s scope limited its ability to inform policymaking decisions.

“We need to know what it will cost to get there and what it will cost once we get there,” she said. “All of that will go into what ratepayers ultimately pay. Indeed, as pointed out by the environmental community, the report does not even assess the savings realized by converting to clean energy.”

Those concerns were echoed by Affordable Energy for New Jersey, a coalition of business groups and building trade unions that has opposed provisions of the energy master plan and claimed its implementation will cost New Jersey residents more than $60 billion.

“Today’s action totally missed the mark, and the board should be embarrassed,” said Mike Makarski, a spokesperson for the coalition. “Instead of clarity, we got the suggestion of another study to look at the actual cost impacts New Jersey residents will face some time in the future.”

The coalition also charged regulators had suppressed a previous report estimating costs for New Jersey’s shift to renewable energy drafted by the Rutgers Center for Green Building.

That study was completed but never released to the public because “we were not satisfied with that report,” Fiordaliso said at Wednesday’s meeting.

But he did have some takeaways from the Brattle report, noting New Jersey would have to step up to assist low-income residents in making their homes energy-efficient or risk hiking rates for the state’s most vulnerable residents.

President Joe Biden’s signing of the Inflation Reduction Act, which set aside $271 billion for clean energy tax credits and incentives, and a friendly administration in the White House could help New Jersey pay for its electrification push, Fiordaliso said.

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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.

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