September 30, 2014
New Jersey

No shortage of challenges for new president of Board of Public Utilities

Tom Johnson | NJ Spotlight | September 29, 2014 |

With a new president taking the helm tomorrow at the state Board of Public Utilities, the agency that regulates gas, electric, water, and other monopolies faces many challenges on how it reacts to rapid changes in those sectors.

Probably most pressing is how the BPU juggles the need to upgrade an aging infrastructure, which proved vulnerable in storms like Hurricane Sandy, without spiking bills to residents and businesses.

There also are questions about how much the state will contribute to helping make the power grid more resilient, how much New Jersey will try to reduce its reliance on fossil fuels that contribute to global climate change, and how aggressively it pursues development of cleaner sources of energy, such as solar and wind power.

When the BPU holds its regular monthly meeting tomorrow, two new commissioners are expected to join the three holdovers at the agency – Richard Mroz, who will serve as president, and Assemblyman Upendra Chivikula (D-Somerset), both of whom were confirmed by the Senate earlier this month.

Not much, however, is likely to be gleaned from the new commissioners at the meeting – given the absence of any controversial items on the agenda. No shortage of more contentious issues will have to be taken up by the BPU in upcoming months.

The agency and the Christie administration, which typically dictates policy at the BPU, have yet to weigh in on a draft bill being drawn up by key legislators that would dramatically ramp up New Jersey’s renewable energy goals. Under the proposal, 80 percent of the state’s electricity would come from renewable energy by 2050 – a target some think implausible and extremely costly to ratepayers.

The BPU also is expected to soon receive an administrative law court judge’s recommendation on a proposal to boost rates for Jersey Central Power & Light, which filed for a $31 million increase three years ago. Both the staff of the BPU and the New Jersey Division of Rate Counsel agreed that rates for customers should be lowered by more than $200 million.

The precise role utilities should play in helping the state meet its goals of promoting renewable energy and efforts to reduce energy consumption is another question the agency must confront. Some utilities embraced doing so, but want to make sure there are regulatory changes to ensure profits fall by reducing how much electricity and gas they deliver to customers.

The agency also is trying to develop a new Energy Resiliency Bank, which would provide funding to wastewater and water treatment plants, hospitals, nursing homes, and other critical facilities to ensure they can still operate even if large parts of the power grid fail, as occurred during Hurricane Sandy.

There also is an ongoing proceeding before the agency to determine what utilities can recover in storm restoration costs from such events – a tab that could run into hundreds of millions of dollars.

Whether wind farms are developed off the Jersey coast is one of the more lingering questions facing the BPU. Four years ago, the Legislature passed and Gov. Chris Christie signed a law aimed at promoting the development of 1,100 megawatts of offshore wind capacity.

None of that has happened, largely because the BPU failed to come up with a financing mechanism – borne by ratepayers – that would help developers line up the needed funding from Wall Street. The agency’s failure to do so has come under repeated criticism from Democratic legislators and clean-energy advocates.

By December 6, the BPU also must reconsider a small offshore wind project in which Fishermen’s Energy would build a 25-megawatt facility three miles off Atlantic City .

The agency rejected the project in March saying it was too costly to ratepayers, but the developer challenged the decision in the appellate division. The court remanded the issue back to the BPU, saying the agency failed to consider the impact of a $47 million grant from the U.S. Department of Energy.

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