We’ve seen how corrupt the New Jersey side of the Port Authority has become under the leadership of Governor Chris Christie, but now we may need some intrepid reporters to look into the state Board of Public Utilities. Why did they just reject a plan to build wind power three miles off the Jersey shore? They claim that they found the project “economically risky,” and maybe that is all there is to it. But Gov. Christie approved the development of offshore wind projects in 2010, and the Utilities Board has yet to approve a single project.
While the Fishermens’ Energy project would have had only five turbines, New Jersey Sierra Club director Jeff Tittel said deciding against it is a setback for the development of offshore wind power.
“I think it slows it down for a longer period, and that’s a concern,” he said. “Originally, we thought New Jersey would be the first state with wind off our coast, and it looks like we’re going to get beaten out by Maryland, Delaware, and Massachusetts. But more importantly, it’s thousands of jobs and it’s electricity that can be produced without pollution.”
Maryland, Delaware, and Massachusetts have Democratic governors. Chris Christie is a Republican. The Fisherman’s Energy project says that the Utility Board’s decision “has no legal basis and is inconsistent with the Offshore Wind Economic Development Act (OWEDA) signed into law by Governor Christie in 2010.” They are going to court:
Fishermen’s Energy will soon file an appeal in a New Jersey appellate court.
“The legislature acted in an overwhelming and bipartisan manner to pass this [OWEDA] legislation. The governor signed the law, but his administration has failed to implement it,” says Paul Gallagher, Fishermen’s Energy’s COO and general counsel. “Now, we must turn to the courts to give meaning to the Rule of Law, which we believe will ultimately result in an approval of this project.”
Supposedly the Utility Board voted unanimously to reject the project on the advise of their staff, but they have little else to back up their decision:
The New Jersey Division of Rate Counsel, which represents utility customers, initially opposed the Fishermen’s Energy’s project after a state consultant concluded it would lead to higher electric bills and hurt job growth.
But the rate counsel agreed to support the application last July after the company addressed how much electric customers would have had to pay for power to fund the project. The rate counsel also found that the project met the company’s obligation to provide net benefits to the public, including an estimated $150 million in manufacturing, construction and investment dollars.
Of course, you could have predicted that the Koch Brothers would be involved in the decision:
“New Jersey has fumbled offshore wind over the last three years,” said Doug O’Malley, director of Environment New Jersey. “We have the potential to be a national leader, but we’re quickly falling behind neighboring states. This pilot would have been an important step forward – and you can’t be an offshore wind leader if you’re not building turbines.”
The group was worried that the state could lose out as wind turbine manufacturers and other businesses that service wind farms decide to locate in states that move forward with wind projects, causing New Jersey to lose out on those new jobs.
Americans for Prosperity, on the other hand – a conservative group founded by the billionaire Koch brothers that pushes to reduce the size of government – called the wind farm a “misguided” project and applauded the state for rejecting it. “The BPU concluded what we have said all along: this offshore wind scheme would have led to significant rate hikes,” the group said in a statement.
The problem is, as I have already pointed out, the Rate Counsel reversed its initial judgment that the project would result in rate hikes. The Board also ignored the company’s assurances that they would move forward even if they did not ultimately receive a grant from the Department of Energy.
The Fishermen’s Energy proposal was based on an expectation of receiving about $100 million in federal grants and tax breaks. The group projected it could complete the project and recoup the cost of financing if it also received financial credits – called Offshore Wind Renewable Energy Certificates, or ORECs — from the state worth $199 for each megawatt hour of energy it produced. The state legislature created the ORECs program as a way to support the fledgling wind energy industry by providing it more revenue per megawatt hour than coal- and oil-generated electricity earns.
But the Board of Public Utilities, concerned that the company had no guarantees that it would actually receive the $100 million in federal money that was key to its plan, rejected the bid. The board argued that without that $100 million, the project would need to receive ORECs from the state of $263 per megawatt hour to be viable. The project would therefore fail one of the basic tests for approval – providing net benefits to ratepayers.
Fishermen’s Energy spokeswoman Rhonda Jackson said the board had ignored what the company has been arguing all along – that it would shoulder the risk of covering the $100 million should it not land the federal grants and tax breaks.
Stefanie Brand, the state’s rate counsel director, said that guarantee was negotiated into its agreement with the company to protect ratepayers and the state’s taxpayers. “It was part of our settlement,” she said. “We initially had significant problems with the company’s plan but we were able to get them to come down to the point where we thought the deal was approvable.”
Until recently, the president of the Board of Public Utilities was Robert Hanna, who the Senate Democrats were refusing to confirm as a justice on the state’s Supreme Court. When Gov. Christie withdrew his nomination and instead proposed him for a position on the Superior Court, the Senate quickly confirmed him. The new president is Dianne Solomon.
If reporters start digging around, they may discover how people’s bread is buttered on the Board, because their decision did not make sense.
