AIMING AT THE BOTTOM LINE — New Jersey lawmakers advanced a trio of bills Thursday aimed at cutting into utility company profits.
The bills — S4260, S4304 and S4519 — all cleared the Senate Economic Growth committee. They each aim to reduce power companies’ return on equity, which hovers around 10 percent in the state.
Two of the bills basically urge the state Board of Public Utilities to rein in profits, but do not set any caps on companies’ returns.
A third bill, Sen. Andrew Zwicker’s S4519, could quantitatively dent profits by removing a special .5 percent return companies are currently eligible for thanks to convoluted federal regulations.
Some utilities get this special “RTO adder” for building transmission projects if they have not formally joined a regional transmission organization, like PJM. Zwicker’s bill would require utilities to join PJM, thus disqualifying their projects for the adder. For PSEG, the adder means that the company’s return on equity for transmission projects is 10.4 percent, rather than 9.9 percent.
The state’s ratepayer watchdog, Brian Lipman, testified in support of the bill. He cited previous comments by outgoing FERC Chair Mark Christie who called the adder “FERC candy” taken from ratepayers and given to transmission companies.
The companies argue that without the incentive, there would be fewer transmission projects, which would hurt grid reliability.
Joseph Checkley, the head of IBEW Local 94, which represents 3,300 PSEG workers, testified that the union will have less work and fewer apprenticeships if the bill passes. The union, utilities and some Republican lawmakers also said the bill doesn’t address the root problem facing the state right now, which is lack of generation causing price spikes.
Utilities are also concerned that the bill would force them to join PJM at a time when Democrats have been trying to get leverage over PJM.
PSEG senior vice president Rick Thigpen said in a statement that “we’ve heard many public officials criticize the shortcomings of PJM and this bill would force us to remain in that very RTO.”
“While not RTO specific, this bill would mandate that we either remain in PJM or pursue an option of joining a different RTO or creating one from scratch — two options that would be unnecessarily expensive for customers,” Thigpen said. “This comes at a time when affordability is a top concern and we should be focusing on supporting our customers in the near-term and expanding electric supply in the long-term to enhance resource adequacy.”
Zwicker, a Somerset County Democrat, modeled the bill on a recent move by Ohio to get rid of the adder. Also, realistically, he said New Jersey cannot leave PJM anytime soon.
“I would argue that we need leverage, true, but that leverage doesn’t exist because we have no other option,” Zwicker said in an interview.
While industry groups generally oppose all the bills aimed at curbing return on equity, PSEG said it supported Burlington County Democratic Sen. Troy Singleton’s bill (S4260) that would prevent utilities from making “excess profits.”
“Excess profits is not something we’re in support of,” Thigpen told lawmakers during a lengthy hearing.
Thigpen said the company would be willing to submit to new annual reviews of its rates. Right now, reviews typically accompany rate cases.
Sen. Joseph Pennacchio, a Morris County Republican, wondered if the bill was even needed, since the BPU already examines utilities’ finances.
“From my understanding, if the BPU is doing a good job, we’re going to be saving nothing,” he said.
Another bill without a hard cap, S4304, requires the BPU to allow utilities only the “lowest reasonable return.”
None of the bills increase the energy supply available to the state, which lawmakers from both parties agree is the only long-term solution to price spikes.
Separately, a bill to explore the role that nuclear power should play in the state cleared the Senate Energy and Environment Committee. The bill (S220) was sponsored by Pennacchio and Sen. Bob Smith, the Middlesex County Democrat who chairs that committee. — Ry Rivard
ASSEMBLY GETS OPTIONS ON GAS: The New York Senate is moving two options on efforts to limit the expansion of the state’s gas system. One is a repeal of what’s known as the “100-foot rule,” which requires other customers to subsidize portions of new gas hookups. If enacted, this would require developers to pay the full cost of building out infrastructure to connect to the gas system. Opponents argue this would raise new home costs and provide minimal savings to existing customers since selling more gas spreads out costs and the investments are paid off over decades. Supporters of slashing the subsidy say it runs counter to the state’s climate goals and eliminates added costs from new hookups that contribute to rate increases.
The other option is a scaled back but still ambitious planning proposal to begin dismantling sections of the gas system. This renamed NY HEAT bill, dubbed the “Customer Savings and Reliability Act,” also includes changes to the 100-foot rule. But it goes much further, allowing the Public Service Commission and utilities to involuntarily remove customers from the gas system after 2030 with several guardrails including extensive public engagement, some support in the affected area, and alternatives being provided at “no cost.” It’s not clear whether Assembly Democrats will move this broader measure, although it has won over some lawmakers. Repeal of the 100-foot rule has even more support.
Opponents of NY HEAT have pushed back on the updated measure. “They simply want fewer people on the gas system, so they want to make it more expensive,” said Republican Assemblymember Phil Palmesano at a Thursday press conference. He promised a four-hour debate if Assembly Democrats bring the updated NY HEAT bill to the floor. Business groups are also opposed, despite specific protections for their gas service in the bill. “As you remove users from the system, you increase the cost to users who have no choice,” said Ken Pokalsky, with the Business Council of New York State.
Proponents of a planned gas transition say customers will switch to electric alternatives anyway. The proposed planning process offers a more managed shift than the status quo, with opportunities for savings from avoided gas infrastructure savings, they say. "As my staff and I engage more closely with the Con Ed rate cases impacting our district, I can see more clearly than ever the urgency of ending the 100-foot rule,” said Democratic Assemblymember Dana Levenberg. “We cannot hope to bring down utility costs while still requiring utilities to maintain vast networks of gas pipelines.” — Marie J. French
BIOSOLIDS MORATORIUM ADVANCES: The Senate also passed a five-year moratorium on using biosolids — from wastewater and industrial sources — as fertilizer, topsoil or mulch. The bill also looks to be moving in the Assembly. Supporters are concerned about PFAS contamination from the waste, pointing to Maine, where farmland was contaminated by the practice.
The state’s operators of wastewater treatment plants are concerned. A five-year ban on spreading biosolids on land would remove a key option to dispose of the waste product, according to the New York Water Environment Association. “There is inadequate capacity in New York State landfills for this volume of additional biosolids, as many have limited space and biosolids often must be mixed with other debris to provide structural integrity within the landfill operational cells,” the group wrote in a letter on the bill. — Marie J. French
PSC GREENLIGHTS TRANSMISSION UPGRADES: The Public Service Commission approved more transmission upgrades linked to increased load, including from electric vehicle charging fleets and other plans. These “urgent upgrades” need to get started more quickly than would happen if they waited for approval through a rate case, the commission decided at Thursday’s meeting. The approved projects total $636 million in costs and will enable 642 megawatts of electrification upgrades — which Department of Public Service staff said was under the “industry standard” cost of $1 million per megawatt. The 29 projects approved include $439.9 million for five Con Ed projects including to allow for electric vehicle charging at Zerega Avenue and Hunt’s Point. Utilities had proposed 65 projects totaling $1.9 billion in costs. The projects that weren’t approved are expected to be considered through rate case proceedings.
“We are not taking steps to subject ourselves to near-term risks in the future, we’re looking to address long-term opportunities and by doing that we limit the costs, we make our investments more efficient and we make them most importantly more effective,” said Public Service Commission Chair Rory Christian at the meeting. “This process increases transparency as well because frankly it's hard for many people to engage in rate cases. And this gives a one-stop opportunity for people to examine the various electrification efforts underway throughout the state.” — Marie J. French
WAIVER GOODBYE — POLITICO’s Alex Nieves: President Donald Trump moved Thursday to eliminate California’s nation-leading vehicle emissions standards, upending strict rules that had become a template for other states, including New York and New Jersey, to realize their greenhouse gas ambitions.
COLUMN ON WAIVER — POLITICO's Debra Kahn: It’s a far cry from the bipartisan consensus that reigned when President Richard Nixon famously signed the Clean Air Act, which set federal air pollution levels for the first time but gave California permission to continue going further, owing to its decade-plus of vehicle emissions rules aimed at the smoggy Los Angeles basin.
EMISSIONS DISCLOSURE CONCERNS — POLITICO’s Marie J. French: Business groups are preemptively ramping up opposition to a climate emissions disclosure bill in the frantic last days of session.
Led by the Business Council of New York State, industry groups are warning lawmakers against New York’s version of a greenhouse gas reporting bill that’s mired in legal and regulatory delays in California. There’s some concern from opponents that the measure could become the last-minute “environmental thing” lawmakers move before leaving Albany.
ACE’S RATE RELIEF — Atlantic City Electric has a plan to help customers deal with rising power prices. The plan resembles one already submitted by PSE&G and is likely to mirror what other utilities in the state will do, though some of the actions may require Board of Public Utilities approval.
ACE said it will stop disconnecting eligible customers’ service from July through September. Gov. Phil Murphy previously suggested utilities take this step and PSE&G has already announced it would. ACE also plans to allow for longer repayment terms for residential customers, up to 24 months, and will submit a plan to the BPU that would give customers a deferred credit on their July and August bills that would be recovered without interest over a six-month period.
“While utility companies in New Jersey do not generate their own energy, do not set the price of electricity, and do not profit from the supply cost increases that took effect June 1, we fully understand that rising energy costs stemming from PJM’s 2024 Capacity Auction are a challenge for our customers,” the company said in a statement. — Ry Rivard
FALL SHOWDOWN SET — Republican Jack Ciattarelli and Democrat Mikie Sherrill are set to square off this fall in the New Jersey general election, setting up a showdown over Gov. Phil Murphy’s clean energy legacy. The Associated Press called the races for both candidates Tuesday night, not long after polls closed.
Sherrill’s campaign has promised to push for 100 percent clean energy, the same goal Murphy ran on and won, and picked up endorsements from the Sierra Club and New Jersey League of Conservation Voters. Ciattarelli has blasted the governor’s “obsession with windmills” for driving up electric prices.
Ciattarelli began his speech with criticism of Murphy's offshore wind goals.
“We will adopt a rational energy policy that lowers people’s monthly electric bills and stops the Democrats from putting those damn wind farms off our Jersey Shore,” he said.
He also criticized overdevelopment, something he’s previously blamed the Sierra Club for ignoring.
Whether wind will be a potent issue for voters, of course, remains to be seen. In her victory speech on Tuesday night, Sherrill framed her campaign as a test of President Donald Trump's policies, though she mentioned Ciattarelli’s position on Hurricane Sandy relief and, in a statement after the speech, pledged to “slash the cost of utilities” by taking “control of our energy future.”
In 2023, Republican legislative campaigns tried to make the environment a wedge issue, but largely failed when Democrats picked up seats in Trenton. Arguably some of those Democrats ran away from Murphy's clean energy plans and, in the years since, lawmakers have not had the stomach to turn the governor’s clean energy goals into binding law.
There are some reasons why energy issues may be more potent this year, though. The biggest is that energy policy choices have demonstrably and significantly driven up people’s power bills. A $25 per month rate increase took effect on June 1. Democrats blame the regional grid operator, PJM; Republicans blame Murphy’s focus on offshore wind projects that are dead or delayed. — Ry Rivard
NEW GAS TRANSITION MEASURE: Democratic lawmakers introduced a new bill aimed at limiting the expansion and transitioning parts of the gas system. The re-branded new bill is the “Customer Savings and Reliability Act.” The slimmed down, not-HEAT Act removes provisions around a 6 percent affordability target for energy bills and still eliminates the 100-foot rule to subsidize new gas hookups. For a neighborhood transition project to move forward after 2030, 50 percent of impacted customers would have to agree to get off the gas system. Installation of alternative equipment — electric heat pumps, hot water and cooking systems — would have to be at no cost to customers. Importantly, a utility can opt out of the process.
“It addresses people’s concerns,” said Assemblymember Jo Anne Simon, the sponsor of the old NY HEAT and the new bill. “A transition plan would have to be cheaper … we increase the number of hearings.” Simon said she’s “very hopeful” about the bill’s prospects given the revisions. “It will accomplish the goals of transitioning,” she said.
Environmental groups including the New York League of Conservation Voters, Earthjustice, Alliance for a Green Economy and WE ACT for Environmental Justice endorsed the new version. The measure “would reduce costs for ratepayers, advance region-specific utility planning to decarbonize buildings at a neighborhood-scale, and provide responsible, cost-effective alternatives for heating, cooling and hot water,” the memo states.
NY HEAT’s staunchest opponents are still opposed, particularly New Yorkers for Affordable Energy, which is backed by labor, pipeline companies and National Fuel. “It’s a blueprint for higher costs and unreliable service,” the group’s opposition memo states. One of its members predicts layoffs if the 100-foot rule is eliminated, raising costs for developers seeking new gas hookups since they’ll have to pay the full costs rather than being subsidized by other customers. — Marie J. French
CORRECTION: Assemblymember John McDonald said local governments would be involved in a new process under a revised gas transition measure. “It’s common sense, moves in the right direction, including local governments and residents in the process,” McDonald said.
BLET'S MAKE A DEAL — The union of engineers whose strike idled NJ Transit trains in May voted to ratify a deal that will raise wages to “over $50 per hour,” the Brotherhood of Locomotive Engineers and Trainmen said Tuesday. The union said its members had overwhelmingly voted to approve the seven-year deal, which replaces one that expired before the pandemic. “This agreement gives us the pay raises we needed, but also was done without a major hit to NJT’s budget and should not require a fare hike for passengers,” union leader Tom Haas said in a statement. The head of NJ Transit, CEO Kris Kolluri, said in a statement he was pleased by the vote. The union’s rank and file had previously voted down another deal, teeing up the strike that resulted in this agreement. — Ry Rivard |
