TRENTON – The state Board of Public Utilities today rejected the latest plan for a 25 megawatt offshore wind farm, saying New Jersey taxpayers would be on the hook for too much money should the anticipated federal grants fall through.
The five turbine demonstration wind farm to be built in state waters three miles off the coast of Atlantic City, was first proposed in 2011, from a coalition called Fishermen’s Energy. The wind farm, which would be the first in New Jersey waters and the first along the East Coast, would power 10,000 homes and cost $200 million. Officials of the group have said its construction will bring more than $150 million in economic activity to New Jersey and create 250 jobs.
But in a meeting today, the BPU agreed with its staff recommendation, which was to reject a settlement negotiated between Fishermen’s Energy and the state Division of Rate Counsel, which is essentially the public’s watchdog on such matters.
The board staff, which reviewed the settlement, objected to several aspects. Most notably, it opposed a $19.2 million contingency fee that New Jerseyans would pay Fishermen’s Energy if expected federal grants to fund the project fell through, and the project was abandoned.
Chris Weissmann, chief executive of Fishermen’s Energy, said outside the statehouse committee room after the meeting that he was disappointed by the decision, but hopeful for the future.
In a news release the group handed out minutes after the meeting, Fishermen’s Energy said it was “pleased to continue to work with the New Jersey Board of Public Utilities toward a successful launch of the offshore wind industry in New Jersey.”
Like other proposed wind-energy projects in New Jersey, the demonstration wind farm will rely on “Offshore Renewable Energy Certificates” to recoup millions of dollars investors will have sunk into the project. Money from those so-called ORECs would be passed on to New Jersey ratepayers to subsidize wind power, which like solar power, does not yet pay for itself.
The negotiated settlement between Fishermen’s and Rate Counsel would have set ORECs at $187 provided the expected federal grants to fund part of the project would have been received.
The settlement also included a tier-pricing model, which would have started ORECs at $251, but which would drop with each federal grant received. The board did not rule on that tier-pricing model because it was not officially introduced.
Weissmann said he hopes “to settle the issues” the board had with the project in the coming weeks.
Despite passing recent legislation that puts New Jersey at the forefront of wind energy development, New Jersey still hasn’t adopted subsidy regulations for OREC awards, which may come at the end of the year, and federal officials have not granted offshore leases.
Fishermen’s Energy is ultimately hoping to build a 350-megawatt windfarm in federal waters, 11 miles east of Ocean City. In June, it anchored a test buoy there to collect data.
The offshore site where the test buoy is located is leased from the U.S. Department of Interior Bureau of Ocean Energy Management.
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