Inherit the Wind: New Jersey Governor’s Executive Order Could Revive Energy Sector

Source: By Tom Johnson, NJSpotlight • Posted: Tuesday, February 6, 2018

Atlantic Co. Wind Farm

Trying to energize a dormant offshore wind program, Gov. Phil Murphy yesterday signed an executive order telling a state agency to do what it was supposed to do seven years ago.

The order directs the state Board of Public Utilities to write regulations governing how utility customers will subsidize an effort to develop 3,500 megawatts of offshore wind generation along the Jersey coast by 2030.

The target is much more ambitious than the 1,100-megawatt goal in the state’s current Energy Master Plan, a target nowhere close to being realized because Gov. Chris Christie’s administration ignored implementing a 2010 law to promote offshore wind in New Jersey.

On the way to 100% clean

With the directive, Murphy is taking the first step in what is likely to be an arduous process to fulfill one of his primary campaign pledges to have a 100 percent clean-energy goal for New Jersey by 2050.

“We cannot allow for stagnation in this growing sector of our energy economy and we cannot lose sight of the tremendous opportunity for offshore wind at the Jersey Shore,” Murphy said. “New Jersey is committed to growing our clean-energy sector, and offshore wind is at the crux of increasing this part of our economy.”

The move drew enthusiastic response from clean-energy advocates who have been frustrated by delays in implementing the 2010 law.

“There’s no reason for a seven year delay,” said Doug O’Malley, director of Environment New Jersey. “For New Jersey to move forward on clean energy, offshore wind needs to be a critical component.”

The Offshore Wind Economic Development Act, signed with great fanfare nearly eight years ago, sought to develop 1,100 megawatts of generation capacity by 2020. Christie, however, soured on the prospect, worried the cost would boost electric bills in a state already saddled with high energy costs.

The administration, at one point, sought to write rules that would allow offshore wind developers to recoup some of their costs through ratepayer subsidies, but the process stalled and was dropped even though the rules were supposed to be adopted within six months of the law’s signing. Without the subsidies, developers say Wall Street will never line up the financing for the projects.

Lagging the federal leases

Despite the delays at the state level, the federal government awarded leases of more than 344,000 acres to two developers to build enough offshore wind along the Jersey Shore for 1.5 million homes in 2015, The developers, U.S. Wind and Østed, are in the process of completing studies and the wind farms are not expected to be operational until the next decade.

In his executive order, Murphy directed the state to begin the necessary rulemaking within 60 days, but the process could take longer because the governor also allows the BPU, Department of Environmental Protection, and Treasury’s office to hire a consultant to help with the drafting of the funding mechanism.

As in the past, the big hurdle will be determining how much ratepayers will have to pay to subsidize the new offshore wind farms, which a couple years ago were projected to cost $1 billion or more. In the past, the BPU rejected a smaller version of an offshore wind farm three miles off Atlantic City because the cost was too high.

With the Legislature considering a bill (S-877) to subsidize nuclear power plants in New Jersey; expand solar; and promote energy conservation, any new costs to be imposed on utility customers are sure to be contested. That point was emphasized at a legislative hearing last week on the nuclear bill.

‘Not a bottomless pit’

“Ratepayers are not a bottomless pit,” said Stefanie Brand, director of the New Jersey Division of Rate Counsel. “There is a limit to how much we can spend.”

During the debate over the nuclear bill, it has been frequently pointed out that utility customers are paying more than $500 million a year to help subsidize the state’s solar sector.

But conservationists defend the push to develop cleaner sources of energy in a world increasingly subject to climate change. “We are all going to pay a price if we don’t address climate change,” said Eric Stiles, president and CEO of New Jersey Audubon. “The costs are going to be staggering.”

By some estimates, New Jersey has some of the best offshore wind resources on the Eastern Seaboard, but it faces increasing competition from other states to become the heart of the offshore wind sector. Just this week, New York Gov. Andrew Cuomo unveiled a plan to build 2,400 megawatts of offshore wind along the coast of Long Island.

Jeff Tittel, director of the New Jersey Sierra Club, argued offshore wind can be the energy that drives economic growth in the region for decades to come. Even though leases have been awarded, “we can’t make offshore wind a reality unless we have a funding mechanism in place,” Tittel said.