New Jersey BPU outlines significant energy efficiency goals
The New Jersey Board of Public Utilities (BPU) this week approved aggressive Energy Efficiency and Peak Demand Reduction programs that underscore the state’s clean energy priorities.
The BPU set five-year targets for energy reduction at 2.15 percent for electric distribution companies and 1.10 percent for gas distribution companies, which the board said will transition the state to some of the highest energy savings in the country.
“While forwarding the Governor’s clean energy agenda, we worked to ensure that underserved communities will benefit from these programs,” NJBPU President Joseph L. Fiordaliso said on June 10. “These programs will reduce energy burdens and have long-term benefits for participants, including reducing utility bills, improving health, comfort, safety, and creating thousands of green jobs. We are charting a course towards 100 percent clean energy by increasing access to energy efficiency programs, decreasing energy burdens, and creating new economic opportunities for the state of New Jersey.”
The ruling stems from New Jersey’s Clean Energy Act (CEA), which was signed into law by New Jersey Gov. Phil Murphy in May 2018. The law stresses the importance of energy efficiency and puts some of the burden on public utilities to reduce electricity in its service territory — 2 percent for electric utilities and 0.75 percent for gas utilities “in the prior three years within five years of implementation of its gas energy efficiency program.”
“While we see room for improvement in the areas of customer affordability and optimizing program length to support sustained job growth, we were pleased to see that the board made enhancements to the overall framework from prior proposals,” said Michael Jennings, communications lead with Public Service Electric & Gas, at PSEG. “We are currently reviewing the board’s official order to understand all of the details, however we believe what we heard today reflects a long-term commitment to energy efficiency by the state that will benefit customers and the environment, and grow the state’s green economy. We are encouraged that the board incorporated widespread stakeholder input focused on implementing energy efficiency in a manner that is equitable to all.”
Per the order, utilities will be administering energy efficiency programs in the residential, commercial and industrial, and multifamily sectors, and proposing peak demand programs; the state will be administering the Large Energy Users Program, combined heat and power projects, and state and local government programs; and utilities and the state will work together to manage the low-income Comfort Partners program.
“The order is great news for economic development in the state during the recovery from the COVID-19 pandemic, especially for the many small businesses that deliver energy efficiency services to families and other companies,” said Rachel Gold, utilities program director at the American Council for an Energy-Efficient Economy (ACEEE). “In the last few years, New Jersey has struggled to move out of the middle of the pack nationally on energy efficiency policy, but if the utilities are successful in implementing the order, that will change now, big time.”
Expenses for the program will be amortized over 10 years, which is three years longer than originally proposed — but five years shorter than the 15-year amortization period for program investments called for by utilities. PSE&G had said a longer amortization period would minimize the impact on customers’ bills.
“Over the next several months, staff will work with the utilities and the Division of Rate Counsel to develop a mechanism for the utilities to recover their lost revenue as an option should utilities not wish to utilize the Lost Revenue Adjustment Mechanism as laid out in the order,” the BPU said in a statement. “Further, the Board has instituted a system of incentives and penalties as required by the Clean Energy Act to encourage performance.”
The same day Gov. Murphy signed the Clean Energy Act into law, he also issued an executive order to provide a blueprint to bring the state to 100 percent clean energy by 2050.
New Jersey BPU staff will spend the next few months soliciting stakeholder comments and a plan to comply with the CEA. They will also develop a seven-step metric system to assure compliance, which includes affording access to energy efficiency for all New Jersey residents and businesses; decreasing energy burdens for all ratepayers; and expanding job opportunities and other economic benefits for energy efficiency in New Jersey, among other provisions.
The BPU will be creating an Office of Clean Energy Equity to oversee equitable deployment of clean energy technologies and energy efficiency programs in low-income and other underserved communities.
“This order is a big win for ratepayers and the climate, because it will help cut utility bills and heat-trapping carbon emissions,” said Gold.
Although there continues to be concerns about the equitable coverage of energy under the plan, New Jersey electric utilities are focused on helping to accomplish the original goals of the Clean Energy Act, while also not overburdening their customers.
“From here, we look forward to engaging with the parties regarding PSE&G’s Clean Energy Future – Energy Efficiency proposal, which outlines a $2.5 billion investment over six years and is designed to help achieve the energy efficiency goals of the state’s Clean Energy Act,” Jennings said. “The proposal provides every customer with opportunities to use less energy and lower their energy bills, and creates an economic stimulus for the state’s lower-income communities through supplier diversity.”
Jennings added that “The proposal is also expected to create more than 3,700 direct, green tech jobs and an additional 1,300 indirect jobs at a critical time to help New Jersey recover from the widespread job losses and severe economic hardship brought on by the COVID-19 pandemic.”
