October 20, 2011
New Jersey

BPU forging subsidy rules for offshore wind farms

By Eliot Caroom/The Star-Ledger, www.nj.com 19 October 2011

As federal officials work to clear a permitting path for offshore wind farms, experts at the Board of Public Utilities are hashing out rules for subsidies that will help developers who are eager to begin work for the emerging industry.

Both sides say they are close to consensus.

Earlier this year, the Obama administration announced plans to fast-track wind projects near several states, including New Jersey, and to spend $50 million to speed up development of wind farms. Now the state is designing subsidies to help pay for the projects and providing their lenders with at least some guaranteed income.

The payments were the subject of a meeting in Trenton yesterday where offshore wind executives, power industry representatives and the state Division of the Rate Counsel, which advocates for consumers, haggled over rules that will be sent on to the BPU for approval.

Wind developers are pushing for several provisions, including one that would allow them to change personnel, ownership or financing arrangements with a quick, 30-day approval process from the BPU. Stephanie Brand, the head of rate counsel, is against that idea.

“I’m open to you having the ability to seek changes,” Brand said, “but I don’t think I could sign off if the board doesn’t have time to consider them.”

BPU staff agreed that time frame seemed tight.

The wind companies again pushed for greater freedom, pointing out that if they suddenly lose a key engineer, their project could be held up.

“If you come to us and say, ‘Our chief engineer, his wife got a new job in Washington state, and they’re gone,’ by that point, you’re far down the line and it’s in our interests as well (to respond quickly),” said BPU staffer Jake Gertsman. “Once you get a board order and a federal lease, we’re with you on this.”

Brand said she was more concerned about changes to ownership and financing than professional staff changes for wind projects, and pointed out that while wind investors are putting money at risk, so are New Jersey’s ratepayers, who will fund the projects some way or another.

“We are lenders, and we’re a little skittish ourselves,” Brand said. “I think the skittish lenders will have some assurances, and the skittish ratepayers will have some assurances.”

A Rockland Electric representative urged the BPU to keep the ability to revoke subsidy payments if wind developers fail to meet promises. The developers objected.

“The principle is okay, but there has to be flexibility, because as we all know, none of the time frames we thought would be there three, four years ago have come to pass,” said Rob Gibbs, vice president of PSEG’s joint wind venture, Garden State Offshore Energy.

The Retail Energy Supply Association, which represents electricity suppliers, asked the BPU to agree to provide price schedules years in advance. “We need some assurance of what the price will be and that it will be provided to us,” said Gabrielle Figueroa, an attorney for the organization.

As the meeting ended, Gertsman said he thought they were close to rules that could satisfy both sides.

“You’re right, I think we are close,” said Erich Stephens, vice president of OffshoreMW, a company planning to put turbines 14 miles off the coast of Brigantine, a proposal backed with financing from the Blackstone Group.

After a final meeting of stakeholders on Nov. 15, the rules will be decided by the commissioners of the BPU.

URL to article:  https://www.wind-watch.org/news/2011/10/20/bpu-forging-subsidy-rules-for-offshore-wind-farms/