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Another Ratepayer Ripoff

Investments in Conservation & Renewables Yield Far Greater Benefits

If They Build It, You Will Pay

Hold on to your wallets, because here comes another ratepayer backed boondoggle.

South Jersey gas and electric ratepayers will be forced to pick up the huge cost of providing private gas pipeline infrastructure to serve the privately owned re-powered B.L. England power plant. They also will bear the risk of cost increases and the private entities will recover the costs plus profits on those investments.

The South Jersey Gas Company (SJG) is already before the Board of Public Utilities (BPU) right now seeking an almost 9% rate increase – an $11.48 per month increase for the typical homeowner – perhaps resulting from a 2010 BPU approval of $450 million infrastructure investment.

This half billion dollar boondoggle is sure to increase rates even higher, particularly due to unique risks associated with the economics and financing of fracked gas, which the NY Times called a “Ponzi scheme”.

So, lets look at the costs and risks of this project and examine how BPU addressed them.

Shockingly, Rate Counsel raised no objections.

According to original estimates by South Jersey Gas, pipeline construction would cost $63 million. That estimate was recently increased to $90 million.

The final cost is likely be even higher, including multi-million dollar “mitigation” or “offset” bribes to the Pinelands Commission for their approval – so lets say $100 million.

According to South Jersey Gas documents, the re-powering of the B.L. England plant will cost $400 million.  Again, final costs are likely to be much higher – let’s say $500 million.

And those costs do not including the plant and pipeline operating costs or the costs of the gas.

The source of the gas for this pipeline project is Marcellus shale fracking.

Anyone who knows anything about the financing and production and depletion rates of fracked natural gas wells knows that high up front capital costs and steep depletion curves lead to dramatic reductions in both energy return on investment (EROI) and the traditional economic return on investment (ROI).

Simply put, it costs more energy and more money to produce diminishing amounts of gas.

So steep gas price increases are baked into this billion dollar boondoggle cake.

So, now let’s take a look at how the Board of Public Utilities addressed these huge technical, financial, and economic risks to ratepayers.

Did BPU do a rigorous review of the underlying production/depletion and economics of fracked gas drilling and look out for you?

Or did BPU focus on assuring South Jersey Gas Co. (SJG) profits?

On June 21, 2013, the BPU issued a mere 4 page Order approving construction of the gas pipeline – click to read.

First of all, the SJG petition for approval was submitted by SJG to BPU on March 8, 2013.

From what I can tell from reading the Order, it looks like there was no public interest, independent expert testimony, or environmental group intervention in the BPU review of the SJG petition.

Nor was there any pubic hearing or formal consultation with the Pinelands Commission, or review by independent experts in the environmental, engineering, and economics of frack gas well drilling and financing.

There was one public hearing in Upper Township. It was sparsely attended and no expert witnesses were involved.

The BPU Order claims that “No members of the public voiced opposition to the pipeline alignment.”  

This may be true, but it is absurd on its face and points to major defects in the BPU review of the project – which might as well have been held in the Governor’s Office.

The Board did not review this project for consistency with the climate change and emission reduction goals and energy policy adopted in the 2007 Global Warming Response Act. NO CLIMATE CONSIDERATIONS WHATSOEVER. Shocking negligence.

It appears that BPU conducted – at best – a cursory policy review and cherry picked certain pro-gas aspects of the Christie 2011 Energy Master Plan.

The Board deferred response to environmental concerns raised by the public (at that one public hearing) to the environmental permitting process.

These are HUGE flaws, especially because the environmental permits – both for the pipeline construction and the BL England plant re-powering – do NOT consider the key issues, such as project need and justification, alternatives, global warming, fracking gas, Pinelands, et al impacts.

Despite these procedural and substantive weaknesses, the petition was quietly and quickly approved by BPU in just weeks, a remarkably rapid approval.

The substance of the BPU Order is provided on just 4 pages.

I’ll try to touch on issues as they are presented in the order:

The pressure in the pipeline will be 700 pounds per square inch.

This is a high pressure line, almost triple the 250 pressure in a typical SJG line.

This high pressure raises major issues regarding: 1) pipeline safety; 2) pipeline capacity and growth inducing potential; and 3) pipeline gas leak and greenhouse gas impacts associated with pipeline emission rates.

Natural gas has a huge greenhouse gas warming potential – at least 25 times that of CO2 – so pipeline leaks and [lifecycle gas] emissions are a major concern and have the potential to wipe-out any carbon reductions from converting BL England from coal to gas.

High pressure also implies a huge potential capacity (capacity is a function of the volume of the pipeline times the pressure. Higher pressure can move much more gas).

BPU implied the pipeline would promote “reliability” and serve as backup for 63,000 customer  in Cape May.

But a recent SJG press release states a FAR larger number: 267,000!

Once online, the annual throughput of gas to the BL England facility will be about 20 million dekatherms, essentially equal to the amount of gas SJG currently provides to approximately 267,000 homes in a year. 

Just how much gas is SJG bringing into the region? How much new growth with this gas support  – and all of it located in the highly vulnerable shore region and environmentally sensitive Pinelands?

No capacity estimates were even presented by BPU – another major flaw.

Safety risks are greater under high pressure – it appears that BPU merely deferred to SJG representations on safety issues.

Pinelands forest fire risks were not even considered.

And I saved the best for last.

Although the Pinelands Commission lawyer, Ms. Roth, emphatically stated publicly at the July 27, 2013 meeting that the Commission was NOT anticipating a Memorandum of Agreement (MOA) with BPU at that time, the BPU’s June 21, 2013 approval already INCLUDES A MOA WITH THE PINELANDS COMMISSION! see @ page 3:

Like I said, it’s Chinatown!

Roxbury Landfill Odor Contrasts With Paulsboro Chemical Exposures

What explains this disparate treatment?

It’s absolutely imperative that we begin to understand what unfettered, unregulated capitalism does, the violence of that system, which is portrayed in all of the places that we visited.

These are sacrifice zones, areas that have been destroyed for quarterly profit. And we’re talking about environmentally destroyed, communities destroyed, human beings destroyed, families destroyed. And because there are no impediments left, these sacrifice zones are just going to spread outward. ~~~ Chris Hedges

Reading today’s press clips on the continuing saga of Roxbury’s Fenimore landfill odor problem, I’m reminded of a disturbing book I read in college “Expendable Americans” (1974) by Paul Brodeur:

The incredible story of how tens of thousands of American men and women die each year of preventable industrial disease.

Brodeur basically demonstrated that workers’ lives were expendable – industrial poisoning was merely a cost of doing business and generating profits.

Since that book was written, the “expendable” concept has expanded beyond poisoning the workforce of individual plants or industrial sectors.

Under finance capitalism, “free trade”, attacks on unions, and globalization, that worker poisoning Brodeur documented back in 1974 now includes additional practices such as disinvestment,  abandonment, exploitation, and neglect, so that not just workers, but entire communities and regions become “expendable”.

Chris Hedges has called these places “capitalism’s sacrifice zones”:

These are sacrifice zones, areas that have been destroyed for quarterly profit. And we’re talking about environmentally destroyed, communities destroyed, human beings destroyed, families destroyed. And because there are no impediments left, these sacrifice zones are just going to spread outward.

BILL MOYERS: What do you mean, there are no impediments left?

CHRIS HEDGES: There’s no way to control corporate power. The system has broken down, whether it’s Democrat or Republican. And because of that, we’ve all become commodities. Just as the natural world has become a commodity that is being exploited until it is exhausted, or it collapses.

BILL MOYERS: You call them sacrifice zones.

CHRIS HEDGES: Right.

BILL MOYERS: Explain what you mean by that.

CHRIS HEDGES: Well, they have the individuals who live within those areas have no power. The political system is bought off, the judicial system is bought off, the law enforcement system services the interests of power, they have been rendered powerless. You see that in the coal fields of Southern West Virginia.

Now here, in terms of national resources is one of the richest areas of the United States. And yet these harbor the poorest pockets of community, the poorest communities in the United States. Because those resources are extracted. And that money is not funneled back into the communities that are sitting on top of, or next to those resources.

Not only that, but they’re extracted in such a way that the communities themselves are destroyed quite literally because you have not only terrible problems with erosion, as they cause when they do the mountaintop removal, they’ll use these gigantic bulldozers to push off all the trees and then burn them.

And when we flew over the Appalachians, and it’s a terrifying experience, because you realize only then do you realize how vast the devastation is. Just as when we were both in the war in Bosnia, you couldn’t grasp the destruction of ethnic cleansing until you actually flew over Bosnia, and village after village after village had been razed and destroyed.

And the same was true in the Appalachian Mountains. And these people are poisoned. The water is poisoned, it smells, the soil is poisoned. And the people who are making tremendous profits from this don’t even live in West Virginia–

(I strongly urge you to watch the whole interview)

I am not suggesting that Roxbury is a sacrifice zone – no, just the opposite.

What is so disturbing about the Roxbury story is not the fact that

• the residents successfully organized because the landfill’s odors are totally unacceptable, or
• that those odors pose health risks to the residents of the town, or
• that DEP basically created the problem in two ways: first by a decades long failure to enforce environmental laws to assure that the landfill was properly closed, and  second, by allowing additional new disposal there to generate revenues to redevelop the site as a solar facility (both statewide problems that have gotten zero media attention).

No, the troubling part is the extraordinary media attention, resources, and government responsiveness that the Roxbury community has received, when compared to similar and even far worse cases where entire communities are ignored by media and government.

Roxbury received dozens of news stories, got legislation passed, and benefitted from aggressive DEP regulatory enforcement – all in a matter of weeks.

In contrast, the people of Pompton Lakes – exposed to far greater health risks –  have been poisoned by Dupont’s toxic gases seeping into their own homes for YEARS, while government is neutered by corporate lawyers and lobbyists.

The people of Paulsboro were left unprotected by negligent railroads, non-existent regulatory oversight, and even poorly trained emergency responders whose batteries didn’t work.

They were lied to about health risks and told to suck it up and “shelter in place”.

The people of Camden (and many other places) have simply been abandoned.

What explains this disparate treatment – between places like Roxbury and Paulsboro?

• It could be that the Fenimore landfill is les than 10 miles – as the crow flies – from Governor Christie’s house.

No one asked the people of Roxbury to “shelter in place”.

No, Roxbury gets 24/7 continuous air monitoring, evacuation warnings, safe shelters, and emergency email notifications.

• It could be that the racial makeup of Roxbury township is 88.21% (20,573) White, 2.34% (546) Black or African American, with  median household income  of $95,676 and the median family income of $110,538.

In contrast, the racial makeup of Paulsboro is 54.49% (3,322) White, 36.72% (2,239)Black or African American, with a median household income of $43,846 and the median family income was $61,147

But the “expendable” problem is not limited to places like Paulsboro.

DEP has analyzed the data on a statewide level and found statistically significant relationships between race and income, see: DEP Discovers Discrimination – Dumps Environmental Justice Issue in Christie’s Lap

• And it could be that the chemical industry and the railroads that destroy places like Paulsboro and Pompton Lakes are powerful corporations with legions of lawyers and lobbyists, while the Fenimore landfill doesn’t have that kind of power.

It’s way past time that media attention and government oversight are based on risks – not politics, money and corporate power.

If not, we all become “expendable”, as the inability to challenge corporate power leads to accelerating global warming and catastrophic climate collapse.