The state’s much-touted efforts to promote offshore wind farms continue to lose steam, amid growing criticism from lawmakers and others.
In a filing Wednesday by the staff of the state Board of Public Utilities, the agency reiterated its opposition to a proposed pilot project in the ocean 2.8 miles off the coast at Atlantic City.
The first offshore wind farm to come before regulators, advocates said it would demonstrate the benefits of developing a robust new industry off the coast of New Jersey.
The opposition from the agency’s staff, filed in a case pending before the BPU, casts increased doubt on the fate of the 25-megawatt project, dubbed the Fishermen’s Atlantic City Wind (FACW) farm.
The BPU will hold a hearing on the project later this month. The proceedings may kill the project, which many in the industry already view as unlikely to move forward.
But the agency’s stance seemed certain to heighten recurring criticism from Senate President Stephen Sweeney (D-Gloucester), other lawmakers and environmentalists, who yesterday once again lashed out at the BPU for failing to implement a three-year-old law designed to move New Jersey into a leadership role in promoting a new, cleaner way of producing electricity.
Under the state’s Energy Master Plan, New Jersey aims to promote development of 1,100 megawatts of offshore wind capacity off the coast by 2020. Those efforts have been stymied by the failure of BPU to adopt a financing mechanism to develop wind farms up to 20 miles offshore, as well as delays in federal permits for the projects. The state agency was supposed to develop rules to make that happen by March 2011, but has yet to propose any financing device.
“Three years ago, we took a great step forward for renewable energy, jobs and economic growth here in New Jersey,’’ said Sweeney, who sponsored the bill signed into law by Gov. Chris Christie. “But almost three years later, almost nothing has come to pass. That is unacceptable.’’
Sweeney argued that when New Jersey passed the offshore wind law, the state was viewed as the leader in the nation in developing the technology, which is already used widely in Europe and other parts of the globe.
“The window is closing; these jobs are going to go away,’’ Sweeney said at a press conference in the Statehouse, saying states like Maryland and Massachusetts are being more aggressive in efforts to lure offshore wind manufacturers to their states.
In the past, Sweeney has blamed the delays in promoting the projects on Christie’s presidential ambitions – offshore wind development is opposed by many conservatives – but yesterday he pinned most of the blame on the BPU, although he added that the governor should be able to force a state agency to implement the law.
Sweeney and Sen. Jim Whelan (D-Atlantic) both noted that the Division of Rate Counsel, which represents the interests of utility customers, previously signed a stipulation of agreement with Fishermen’s Energy in support of the project, saying it would benefit consumers. In an unusual move, however, the Division of Rate Counsel has declined to amplify its previous support for the Atlantic City wind farm project.
“The rest of the world has figured this out,’’ Whelan said. “It is a tremendous opportunity for economic growth.’’
The BPU declined comment on the criticisms leveled at the press conference.
In its filing in the Fishermen’s Energy case, however, the agency’s staff argued that the project did not meet certain requirements in the 2010 law, which set a stiff standard in requiring developers to project how the electricity from the turbines (which are more expensive than traditional power plants) would provide a net economic benefit to the state. The staff also questioned the technology selected by the developer to produce electricity from the turbines, saying it might pose an unnecessary technical risk.
Economics, however, seemed to be the biggest factor in the state agency’s opposition. Fishermen’s Energy project relies on lucrative federal tax credits to make the project viable from a business and ratepayer perspective, but those incentives expire at the end of this year, unless renewed by Congress, and that appears to be a long-shot prospect, at best.
“Most importantly, FACW has failed to credibly demonstrate that it will actually receive, at this late date, all of the federal subsidies,’’ the staff said in its brief.
But Fishermen’s Energy submitted its initial application in 2011 and since then has filed supporting testimony in a matter that has now been pending for more than 900 days.
“We feel we have addressed every part of the statute,’’ said Paul Gallagher, chief operating officer and general counsel for Fishermen’s Energy. He said the company’s project would present “zero risk’’ to ratepayers—whether or not the project received the sought-after federal subsidies.
What happens next? The BPU will hear oral arguments on the Atlantic City project on Dec. 20. Meanwhile, there may be legislative efforts, or even litigation in court, to try to advance offshore wind projects.
Industry observers note that there is pending legislation would force utilities to provide the upfront capital to finance offshore wind farms, with the money to be recouped from ratepayers and power suppliers.
When Sweeney was asked about potential legislative remedies, he dodged the question, but did not rule out litigation.
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