Lawmakers pass controversial bill to give tax break to offshore wind developer

Gov. Phil Murphy is expected to sign the bill, which critics decried as ‘malfeasance’

By: - June 30, 2023 8:24 pm

The wind developer Ørsted, the company behind New Jersey's offshore wind project, will get a tax break under a bill that lawmakers narrowly passed on their last day in session before summer break. (Sarah Vogelsong/ Virginia Mercury)

Lawmakers narrowly advanced fast-tracked legislation Friday that would give a Danish company a multimillion-dollar tax break for its offshore wind project, despite objections from Republicans who slammed it as “corporate welfare.”

The bill would allow Ørsted, the company approved to build a 1,100-megawatt project 15 miles off the Atlantic City coastline, to keep federal tax credits that otherwise would return to ratepayers. The value of the credit would be $2.40 per year per ratepayer, by Ørsted’s estimate, but the company’s total potential savings is unclear.

Critics questioned why legislators should give “a corporate bailout to a foreign company on the backs of New Jersey ratepayers,” as Assemblywoman Vicky Flynn (R-Monmouth) put it.

“Ørsted is realizing that wind farm projects don’t make economic sense without major government subsidies, so they are now looking for a huge handout at the expense of New Jersey utility customers,” Sen. Ed Durr (R-Gloucester) said. “We shouldn’t give it to them.”

But supporters say the bill, which has the governor’s support, would help New Jersey compete with other neighboring states racing to build offshore wind.

Assemblyman Lou Greenwald (D-Camden), the bill’s prime sponsor in the Assembly, denied the bill was “a corporate gift,” reminding his colleagues of an amendment that would require Ørsted to hold $200 million in escrow to help pay for two wind projects under construction in Salem and Gloucester counties.

“If we fail to act today, our new industry will be at a competitive disadvantage,” Greenwald said.

The proposal proved so divisive that Senate President Nicholas Scutari pulled it from consideration Friday afternoon after it fell one vote short of the 21 yes votes required for passage. The bill’s prime sponsor, Sen. Bob Smith (D-Middlesex), was absent from the voting session.

Sen. Shirley Turner (D-Mercer) was the pivotal vote for a controversial bill that would give a Danish wind energy company a tax break for their offshore wind project off Atlantic City. (Hal Brown for New Jersey Monitor)

Its passage came after some last-minute negotiating to win over an unpersuaded Democratic senator.

Sen. Shirley Turner (D-Mercer) said she hesitated to support the proposal because of concerns about how many women and minorities would get the jobs the project created and how it could hurt ratepayers. She also worried a foreign company, instead of a New Jersey company, would benefit, but “they said they didn’t have anybody to bid on it,” she said.

But during a second vote later Friday, Turner delivered the 21st vote needed for passage, telling the New Jersey Monitor her colleagues allayed her concerns.

“I wanted to make sure that it was really going to benefit the state of New Jersey,” Turner said. “And you’ve got to come down on the side where you think somewhere the truth is.”

In the Assembly, the bill passed by a vote of 44-31 after several Republicans stood to rail against it.

Assemblyman Brian Rumpf (R-Ocean) called it “corporate welfare and malfeasance to our commercial fishing industry and our tourism industry.”

Assemblyman Gerry Scharfenberger (R-Monmouth) warned legislators they should fully investigate critics’ concerns before moving forward with legislation that’s “so irreversible and consequential.”

“We have to wait before we get into something where there’s no turning back,” Scharfenberger said.

The state’s advocate for ratepayers, Brian Lipman of the state Division of Rate Counsel, also had urged lawmakers to reject the bill, warning it would increase ratepayers’ costs. The nonpartisan Office of Legislative Services, tasked with drafting a fiscal estimate for the bill, predicted unspecified higher utility costs for ratepayers too.

Still, a spokesman for Gov. Phil Murphy called the bill “foundational to New Jersey’s continued offshore wind growth and clean energy future.”

“To that end, Gov. Murphy looks forward to signing a bill that will help realize the state’s first offshore wind project and critical supply chain facilities — as well as their associated clean energy and economic benefits,” spokesman Bailey Lawrence said.

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Dana DiFilippo
Dana DiFilippo

Dana DiFilippo comes to the New Jersey Monitor from WHYY, Philadelphia’s NPR station, and the Philadelphia Daily News, a paper known for exposing corruption and holding public officials accountable. Prior to that, she worked at newspapers in Cincinnati, Pittsburgh, and suburban Philadelphia and has freelanced for various local and national magazines, newspapers and websites. She lives in Central Jersey with her husband, a photojournalist, and their two children.