Dead End Christie Administration Blocks Energy Efficiency Improvements

BPU Rejects “Low Hanging Fruit” – The Most Cost Effective Energy Policy Option

Roots of Debacle Lie in Christie’s Executive Orders & Bob Martin’s Private Sector “Expertise” 

Tom Johnson at NJ Spotlight reports that the Christie BPU just denied Sierra Club’s petition for NJ to catch up to other states who are saving billions of dollars by developing an energy efficiency portfolio standard to implement the State’s goals of reducing energy demand by 20% by 2020. see:

• State Takes Pass on Energy Efficiency Petition Filed By Sierra Club

I strongly encourage folks to read the Sierra Club’s petition to get a sense of just had bad NJ’s energy efficiency programs perform – at a less than 0.5% rate (compared to the 20% NJ goal) – and how irresponsible this decision is:

Other states are beating New Jersey to the punch. They have set binding targets to boost their energy efficiency investments, thereby securing lower energy bills, job growth, and reduced pollution more rapidly and profitably than New Jersey can without targets. For example, Massachusetts generated $5.5 billion in economic benefits in just three years, and Ohio is on pace to capture approximately $5.6 billion in economic benefits by 2020. Continued delay threatens New Jersey’s economic competitiveness, welfare, and environment.

I won’t go into the details in Tom’s story and the Club’s petition here, but will trace the history and policy framework of what can fairly be described as a reckless and irresponsible failure to act by BPU. [Here is the national picture – compare states.]

Some might attribute the decision to arrogance and spite – the Sierra Club is a strong critic of the Gov. and obviously he would be loath to approve of anything with Sierra’s name on it.

Others might say that BPU President Dianne Solomon is an unqualified hack and Christie loyalist incapable of making an informed and independent decision.

Both perspectives would be true – but the real origin of this failure goes back to the early days of the Christie Administration and exposes fundamental flaws in the Governor’s policy views, particularly on energy, environment, and the impacts of regulations on economic development.

First came the BPU Transition Report, which emphasized the need for regulatory reforms to “create a favorable business climate”. The report flat out attacked and bashed the BPU (“The BPU is not business friendly“) and the Energy Master Plan, and especially targeted the Clean Energy Program and Societal Benefits Charge, recommending that BPU:

• Create a new Energy Master Plan and an updated Strategic Plan aligned with the policies of the incoming Administration

• Assess the goals contained in the EMP for their potential effect on energy prices in New Jersey

So, the unexamined premise from the get go was that energy prices were too high and BPU bureaucracy EMP and Clean Energy goals made them higher.

Next came Gov. Christie’s Executive Orders, issued on the first hour of his first day in Office, particularly EO #2, that mandated “cost benefit analysis” and “regulatory relief” and EO #3 on slashing “job killing red tape”.

During the campaign, transition, and early days, the Governor’s point man on energy issues was DEP Commissioner Bob Martin, the Gov.’s so called “energy expert”. Recall that Martin spent his career as a corporate energy consultant.

Here is what Martin said about the 20% efficiency goal and economic analysis of its impacts – as reported by NJ Spotlight on May 6, 2010

Cabinet officials insist they do not envision a radical rewriting of the plan. But Department of Environmental Protection Commissioner Bob Martin and Board of Public Utilities President Lee Solomon have made it clear they believe it fails to consider the economic consequences of pursuing such ambitious targets, including reducing energy consumption by 20 percent by 2020.

“There has to be a cost benefit analysis on the things we do,” said Solomon, whose agency will take the lead in reviewing the plan. “We can’t simply impose what we would like to happen on the state of New Jersey.”

Martin is even more adamant about the plan’s flaws. “It is one of the worst pieces of economic analyses I’ve ever seen done,” he said at a clean energy summit in New Brunswick last month. “They didn’t put the numbers of what it would cost the ratepayer or industry.”

So Martin, the Gov.’s corporate energy expert, told the Gov. the energy efficient goals would cost a ton of money and were not justified by cost benefit analysis.

I wrote about Martin’s unprecedented harsh criticism at the time, see:

• Bully Bob Martin Now Attacks BPU and Rutgers on Energy Master Plan

And since that time, nothing but slogans that “it cost too much” and nothing has changed – other than Gov. Christie diverting $1 billion in Clean Energy Funds and killing renewable energy development, especially off shore wind.

So, there it is – the train wreck whereby even energy efficiency gets killed: the confluence of:

1) unexamined deeply flawed policy premises;

2) Gov. Christie’s anti-regulatory Executive Orders on cost benefit analysis; and

3) Bob Martin’s so called private sector “energy policy expertise”.

End Note: For all those consumed by RGGI – here is RGGI in context of other BPU programs: not even visible on bar chart:

Source: Christie Energy/BPU transition Report (linked above)

The sources of the BPU’s funds which they oversee include: $542 million from the SBC, $17 million from the Retail Adder, $125 million from Retailer Adder that has already been collected, *$10 million from the RGGI Auction, $24.5 million from the BPU Assessment Fee, $286 million in Clean Energy money that has been carried over from previous years, and $99 million in Federal Stimulus money. Grand total: $1.103 billion.

[*my note: this was written in 2009 – subsequent RGGI auctions generated approximately $45-$ 60 million