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Don’t fund small offshore wind project, says ratepayer consultant

Ratepayer funds should not be spent to develop a small offshore wind project first proposed for state waters off Atlantic City by Fishermen’s Energy, according to a consultant for the Ratepayer Counsel.

The funds would be better spent on large-scale projects that are already moving forward, David E. Dismukes, of Acadian Consulting Group in Baton Rouge, Louisiana, said in testimony presented to the state Board of Public Utilities earlier this month.

The proposed 24-megawatt, three-turbine demonstration project was first proposed by Fishermen’s Energy about 10 years ago. It is now called Nautilus Offshore Wind, and Fishermen’s has an agreement to sell the project to EDF Renewables if ratepayer subsidies are approved by the Board of Public Utilities, according to representatives of both companies.

“The Nautilus proposal is clearly expensive relative to any traditional fossil fuel-fired resource, but also exceptionally expensive relative to a wide range of other commercially available renewable energy resources,” Dismukes wrote.

Information on actual costs was redacted in the version of the report that was made public.

Critics have said the project is too small and would happen too late to provide a benefit as a demonstration project. Applications are due by the end of the year for companies able to build the first 1,100 megawatts of offshore wind capacity. They must compete for ratepayer subsidy, while the Nautilus project was given special status to apply in a noncompetitive process through a law passed by the Legislature and signed by Gov. Phil Murphy earlier this year.

Ratepayer Counsel Stefanie Brand hired Dismukes to analyze the Nautilus application for its ability to meet requirements of state law and benefit consumers.

Dismukes recommended the board not approve the Nautilus project or give it ratepayer subsidies, “since neither are in the the public interest.”

He said, “Any small-scale project approved for development in New Jersey will just be pulling resources and opportunities away from the large scale development intended by the governor’s executive order and the board’s recent order.”

Murphy issued an executive order in January to implement the Offshore Wind Economic Development Act of 2010, which languished under former Gov. Chris Christie. The law creates ratepayer financing of wind field development through an Offshore Wind Renewable Energy Credit (OREC) program, funded by electric customers and collected by electric distribution companies like Atlantic City Electric.

The order committed the state to quickly generate 1,100 megawatts annually of offshore wind energy and 3,500 megawatts of generation by the year 2030 – enough to power 1.5 million homes, according to Murphy.

The BPU has since issued rules for applying for the OREC subsidies, and applications are due by the end of the year. Several companies hold leases in federal waters and plan to build large-scale wind farms close enough to New Jersey to send electricity here. A decision on which company or companies will receive credits for the first 1,100 megawatts is expected by July.

But special legislation also passed the Legislature and was signed by Murphy earlier this year, instructing the BPU to open up a special application process for the Fishermen’s/Nautilus project. It alone does not have to compete with other proposals to win subsidy.

The Board of Public Utilities deemed Fishermen’s Energy/EDF Renewables’ offshore wind application complete in September and must decide by early November if it will be supported by ratepayer dollars.