Governors' Wind Energy Coalition

Dispute over arcane rules could upend plans to boost green energy, raise prices for consumers

Credit: (AP Photo/Michael Probst) Energy transmission lines

State legislators are looking for a say in resolving a dispute with the operator of the nation’s largest power grid and federal energy regulators — a battle whose outcome could sway both how much residents pay for electricity and how it is produced.

The issue involves New Jersey and other states’ fears that changes instituted by the Trump administration in arcane rules governing how power supplies are procured by utility companies could derail the planned shift to cleaner sources of energy, like solar and offshore wind.

In response, the New Jersey Board of Public Utilities has begun exploring alternative ways of buying electricity for homes and businesses to keep the lights on. That might include potentially withdrawing from the PJM Interconnection, the regional power grid serving 65 million people from the Eastern Seaboard to Illinois.

Under a bill (S-2804) passed Monday by the Senate Environment and Energy Committee, the BPU would have one year to study the costs and benefits of exiting from the PJM grid, remaining within it or pursuing other options. At the same time, the agency is analyzing whether it makes sense to create its own system of procuring clean-energy sources by establishing its own energy auction in the state.

The latter proposal — backed by two of the state’s big power companies, the Public Service Enterprise Group and Exelon, as well as a couple of prominent environmental groups — has generated significant controversy, with proponents arguing it could save ratepayers money and foes warning it could lead to big increases for consumers.

PJM’s Independent Market Monitor projected it could boost costs to consumers by as much $605 million annually.

‘More information’ sought

Given all the debate over the issue, Sen. Bob Smith, the chairman of the committee, noted this week he had been peppered with questions over what is the real agenda behind the bill.

“The real agenda is we want more information,’’ Smith (D-Middlesex) said during Monday’s hearing. “I would like the Legislature not to be the dumbest group in the room.’’

No one has made a decision to leave PJM, nor to remain within it, Smith said. “We want to become more well-informed,’’ he said.

Asim Haque, a vice president of PJM, told the committee it would be very challenging for New Jersey to go it alone, based upon the interstate nature of the transmission grid. “It could also be financially harmful to families and businesses in the state of New Jersey,’’ he said.

While PJM recognizes the bill is only a study commission, Haque questioned whether it sends a signal that New Jersey intends to exit the PJM capacity market, possibly drying up investment in clean-energy projects currently in the grid operators’ queue.

“Our preference is states don’t exit the capacity markets,’’ said Haque, referring to the existing annual auction where rights to power are secured to keep the lights on at times of peak demand.

Worries about costs to consumers

Others argued the bill’s targets were too narrow and should include looking at how all of the state’s clean-energy goals and other energy investments will impact New Jersey’s already high energy costs.

“Our overarching concern is the cost of electricity in New Jersey and to have an overall study of what is our cost of electricity and where are we going for the long term with all the different ventures the board is pursuing on clean energy,’’ said Dennis Hart, executive director of the Chemistry Council of New Jersey.

Smith, however, rejected the request. “I don’t know if we can get into the cost of electricity. That’s probably more than anything we can handle right now,’’ Smith said at the end of the hearing, apparently referring to the coronavirus outbreak.

Instead, the committee amended the bill at Smith’s recommendation to include a study of the proposal to set up a statewide auction where New Jersey could buy clean energy.