August 17, 2021
New Jersey

NJ readies for green future but says little about costs

By some accounts, the Murphy administration is making significant progress in its goal to transition to 100% clean energy by mid-century to avoid the worst of the expected impacts of climate change.

In the past few years, the state approved building three large wind farms off the New Jersey coast. It ordered gas and electric utilities to curb customers’ energy use and it adopted a new program to begin electrifying the transportation sector.

What it hasn’t done is explain what these shifts in policy will end up costing ratepayers and whether the public will find it affordable. Such an analysis was first promised to the public in a new Energy Master Plan released in January 2020, then later in the first quarter of that year, and most recently in a new study not expected to be concluded for a year-and-half.

In that vacuum, numerous organizations have taken a stab at analyzing those costs, with some concluding the state has underestimated the cost of some of the key components of that energy plan, particularly in the transportation and building sectors.

A consultant for the state in developing the Energy Master Plan and a related plan, the Rocky Mountain Institute, found the costs of shifting to a clean-energy economy would be relatively small when compared to total energy expenditures in New Jersey. If implemented properly, the overall cost would increase by about $2.2 billion annually, the analysis found.

But a consultant for Affordable Energy for New Jersey, an organization opposed to some of the initiatives in the master plan, projected the total cost of the plan and its policies could run up to $525 billion, or $52,000 per person over the life of the program.

Jonathan Lesser, an economist who did that analysis and who is also an adjunct fellow for the conservative Manhattan Institute, argued the costs of pursuing a clean-energy economy are mounting in states ahead of New Jersey. “We’re starting to see a backlash in California,’’ Lesser said.

In a statement, the New Jersey Board of Public Utilities, the state agency in the forefront of implementing the administration’s clean-energy agenda, countered those arguments by asking what the cost of inaction is.

Citing last week’s United Nation’s climate change report, “waiting to act is not an option,’’ the board said. The actions it has taken over the last four years, the board said in its statement, are ‘’designed to address and where we can reverse, the impacts of climate change while also growing the clean energy economy, producing thousands of jobs and resulting in billions of dollars in economic benefits for the state.’’

Division of Rate Counsel director Stefanie Brand agreed the state has no choice but to move forward because the world is burning up, but still urged the need for a thorough analysis of the costs. “You can’t argue we don’t have to do this,’’ said Brand, who added the cost analysis is necessary so that affordable clean-energy choices are made.

“We need this analysis because there a thousand choices that will have to be made,’’ she said. “You can do this transition so that it will not cost $500 billion, but you need to do this analysis to find the ways to do it. It is going to be expensive.’’

One way to limit the costs to ratepayers, Brand said, is to have the private sector fund certain initiatives, like building charging stations for electric vehicles, instead of relying on electric utilities. To some extent, the BPU has embraced that approach in approving electric utility EV programs.

But Dennis Hart, executive director of the Chemistry Council of NJ, an organization that did its own analysis of what clean-energy programs are going to cost its members, disagreed. That analysis found its members are paying thousands of dollars more on their monthly electric bills.

“People are starting to realize what it is going to cost and who is going to pay for it,’’ Hart said, who added that enough people are raising these questions so legislators are beginning to look at the issue, too.

Raymond Cantor, a vice president of the New Jersey Business & Industry Association, agreed. “These are going to be significant costs and we need to have an adult conversation with our eyes wide open,’’ he said.

But Doug O’Malley, director of Environment New Jersey, questioned how seriously these studies ought to be considered. “Renewable energy and energy efficiency are increasingly a threat to the fossil fuel business model,’’ he said.