1 STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION 2 CLEAN AIR COUNCIL THE IMPACT OF ELECTRIC UTILITY 3 DEREGULATION ON NEW JERSEY'S ENVIRONMENT 1999 PUBLIC HEARING 4 5 6 7 8 9 Transcript of proceedings taken on April 14, 1999 at 9:30 a.m. at the Department of Environmental 10 Protection, 401 East State Street, Trenton, NJ. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2 1 A P P E A R A N C E S 2 CLEAN AIR COUNCIL MEMBERS: 3 George Currier, P.E. 4 Peter S. Palmer, NJ Association of counties Irwin S. 5 Zonis, public 6 Michael Berry, NJ Department of Health and Senior Services 7 Stephen J. Papenberg, NJ Health Officers Association 8 Farid Ahmad, P.E., NJ Department of Community Affairs 9 Raymond M. Manganelli, PhD, public 10 Pete Anderson, NJ Department of Agriculture 11 Michael Egenton, NJ Chamber of Commerce 12 Jorge H. Berkowitz, PhD., Business and Industry 13 Joseph A. Spatola, PhD., public 14 John Maxwell, public 15 Erin Indelicato, Clean Air Council Liaison 16 17 18 19 20 21 22 23 24 25 3 1 I N D E X 2 3 SPEAKER PAGE 4 Robert C. Shinn 11 5 Richard Bagger 29 6 John Wisnewski 40 7 Glen Weiss 47 8 Carol Murphy 55 9 Hal Bozarth 64 10 Chris Siebens 80 11 Mark Brownstein 92 12 Brian KillKenny 110 13 Cherae Bishop 121 14 Jim Sinclair 129 15 Steve Gabel 138 16 Michele McMorrow 150 17 18 19 20 21 22 23 24 25 4 1 MR. SPATOLA: My name is Joseph Spatola. I 2 want to welcome the general public this morning 3 to our annual public hearing for 1999. The 4 subject of this year's public hearing is the 5 impact of the electric utility regulation on New 6 Jersey's environment. As the general public 7 knows, the regulations of the electrical utility 8 industry resulting from federal actions stands a 9 great competition in the process of offering 10 lower electric rates for all customers. The 11 deregulation, however, there are other impacts 12 expected to occur particularly on the 13 environment. Today we will explore this aspect 14 of deregulation in an attempt to determine how 15 public policy should will be developed to deal 16 this this matter. As chairman of this mornings's 17 public hearing, or today's is Dr. Jorge Berkowitz 18 to my right, and he will be sharing and 19 overseeing this public hearing today. Before I 20 turn it over to him, I would like to have the 21 members of the Clean Air Council introduce 22 themselves. Before that happens, I would like to 23 take this opportunity to pay special thanks to 24 Mrs. Erin Indelicato for all her work and effort 25 to get this public hearing together so we can 5 1 have it this year as we do every year. And also, 2 to thank John Elston who has helped in sharing 3 the department of resources in putting this 4 hearing together as well. So at this point I 5 would like to get introductions done across the 6 board here. 7 MR. MAXWELL: My name is John Maxwell. I'm 8 a member of the public. And when I'm not a 9 member of the public I'm with the New Jersey 10 petroleum council. And I would like to also say 11 special thanks to Joe for being our chair during 12 the last year, he's done a marvelous job. As 13 well as to recognize the other folks who 14 distributed their time and effort to the work of 15 the Clean Air Council. 16 MR. CURRIER: My name is George Currier. 17 I'm vice president in charge of the mechanical 18 engineering. I represent the New Jersey society 19 of professional engineers. 20 MR. PALMER: I'm Peter Palmer, representing 21 the New Jersey association of the counties. 22 MR. ZONIS: Irwin Zonis, I'm a public 23 member and I'm retired. 24 MR. BERRY: Michael Berry, I represent the 25 New Jersey Department of health and senior 6 1 services. 2 MR. PAPENBERG: Stephen Papenberg, I'm the 3 health officer of South Hunterdon Township. I'm 4 also the president of New Jersey local boards of 5 health association. And I'm representing New 6 Jersey health officer's association. 7 MR. AHMAD: Farid Ahmad, I represent New 8 Jersey department of community affairs. 9 MR. ANDERSON: Pete Anderson, I represent 10 the secretary of agriculture, and the department 11 of agriculture. 12 MR. EGENTON: Michael Egenton, representing 13 the New Jersey state chamber of commerce. 14 MR. BERKOWITZ: Good morning, my name is 15 George Berkowitz, I'm a vice president of 16 environmental scientists. And I represent New 17 Jersey business and industry association. 18 MR. MANGANELLI: I'm Ray Manganelli and I 19 represent the public. 20 MR. BERKOWITZ: I'd like to thank Joe for 21 the introduction of today's topic. I'd just like 22 to take a couple of minutes to reintroduce what 23 we're looking for today, as well as some of the 24 ground rules. First of all, I would like 25 to--let's go over some housekeeping details, it's 7 1 probably more important than anything. There 2 will be no breaks today, no scheduled breaks, so 3 you all have to stay here. We have a very tight 4 schedule, a very tight schedule indeed. We're 5 booked up with speakers until 3:30, and knowing 6 us for asking questions, it's going to be a 7 difficult task to stay on that schedule, but I 8 will do my best. Therefore, with three minutes 9 remaining in your allotted time, I will tell you 10 that. And then, with a certain amount of 11 tolerance, I will tell you to please end your 12 discussion or your presentation. If we run very 13 late, which is a possibility, and hopefully not a 14 necessity to do this, the chair reserves the 15 right to cut down the scheduled 15 minute 16 presentations to whatever is necessary. I hope 17 we don't have to do that. I also would like to 18 give a couple of thanks, first of all, the 19 subcommittee of the Clean Air Council who worked 20 on putting this together, Dr. Spatola, Mr. 21 Maxwell and Mr. Egenton, I thank very much for 22 their time and efforts. I also would like to 23 Erin Indelicato for doing just an outstanding 24 job, as well as members from the department who 25 serve us extremely well and with a great deal of 8 1 attention. And Mr. Elston, and Mr. O'Sullivan 2 and people like Sandra and so forth and so on, we 3 are really thankful for all of their efforts for 4 working with the Clean Air Council. We are here 5 to discuss the impacts of senate five, Assembly 6 ten sponsored by Senator Bruso and Assemblyman 7 D'Catano and Barget. I think perhaps the best 8 way to launch into this is really to take a look 9 on the our announcement, because I cannot do a 10 better job of discussing the issues that we seek 11 to explore in today's session. First of all, the 12 Clean Air Council was formulated in 1954 by an 13 act of the legislature. The clean air 14 council--one of the tasks of the Clean Air 15 Council is to make recommendations to the 16 commissioner of the department of environmental 17 protection on topics as they impact clean air. 18 One of the ways that we do this every year is we 19 have an annual hearing on a topic that we think 20 is timely and appropriate, in order to hear from 21 all the representatives of the 22 all--representatives of all the public so that we 23 can assimilate the information, digest it, 24 discuss it, debate it, and then come out with a 25 recommendation report to the commissioner 9 1 regarding that specific topic. That's what this 2 is all about today. The New Jersey citizens can 3 expect to see the deregulation in the state's 4 electric utility industry the summer of 1999. I 5 believe the date is August 1 for electric, and 6 December 31 for gas, if I'm not mistaken. How 7 will these changes affect their environment? The 8 question will be the topic of the New Jersey 9 clean air council's April 14, 1999 public 10 hearing. The purpose of the hearing is to 11 provide information to the Clean Air Council from 12 interested members of the public about the 13 potential environmental impacts of energy 14 deregulation. A transformation of the electric 15 industry is expected to result in deregulation. 16 Many predict that this transformation will affect 17 the type of fuel used in generation of 18 electricity, which in turn will affect the type 19 and amount of pollution New Jersey's air, as well 20 as the pollution transported downwind into New 21 Jersey from other states. The hearing will 22 consider what the environmental impacts may be, 23 evaluate the degree or extent of the impacts, 24 consider what actions state government may take 25 to bring about environmental improvement, and to 10 1 address the consequences. The Clean Air Council 2 recognizes that individual electricity customers 3 may well affect the outcome. Deregulation will 4 allow customers to choose its supplier, and 5 decide whether to take the environmental 6 characteristics of the power into consideration 7 when deciding what power to buy. The hearing 8 will explore the best means to inform the public 9 of the significance of the choice they will 10 make. The Clean Air Council looks for the 11 following questions at the public hearing. One, 12 in 1995, 39 percent of New Jersey's electricity 13 came from coal, four percent from oil, 11 percent 14 from natural gas, 44 percent from nuclear, and 15 two percent from hydroelectric power. How will 16 this change with deregulation? Two, what effect 17 will deregulation have on New Jersey air quality? 18 What other environmental impacts might result? 19 For example, specifically related to mercury 20 contamination. And three, what plan does the 21 state government have? And this is an important 22 issue, and one that is keenly of interest to all 23 the council, but particularly select members on 24 the council. What plan does the state government 25 have to insure that the concerned public is 11 1 provided the information it needs? What 2 information does a citizen need to make an 3 informed choice in selecting an energy supplier? 4 And by the way, we have previewed some attempts 5 at this, and quite frankly, we're still not 6 convinced that anybody has the best way of doing 7 this. Four, how can state government protect New 8 Jersey air from being polluted by emissions from 9 less clean, out-of-state energy sources? Five, 10 what types of conservation and new clean sources 11 including those that rely on renewable energy, 12 should be encouraged in New Jersey, and what can 13 state government do to promote these? Six, will 14 deregulation provide incentives or disincentives 15 for conservation and renewable power? That's 16 what we're trying to do today, trying to 17 understand all these issues. And without further 18 to do, it's my distinct pleasure, and always a 19 pleasure, to introduce you to the department of 20 environmental commissioner, Mr. Robert Shinn. 21 MR. SHINN: Thank you very much. It's my 22 pleasure to be here this morning and address the 23 council. And I'd like to thank all the members 24 for all their good work in dealing with an issue 25 that's really a tough one for New Jersey. I just 12 1 think that looking back ten years where we were 2 in 1988, with 45, one hour ozone violations and 3 where we are in 1998 with four, one hour 4 violations is pretty indicative of the progress 5 we've made. However, that's with a one hour 6 standard, and with the eight hour standard it's a 7 different story. I think we have something like 8 47 violations of the eight hour standard this 9 year, so we've got our work cut out for us. But 10 it appears with some additional reductions of NOx 11 and VOC's, that the one hour standard is somewhat 12 within our reach. As you know, the second phase 13 of the OTC, NOx goes into effect May of this 14 year, which is a 65 percent reduction level. So 15 NOx being one of our targeted precursors, we're 16 going to see additional reductions in NOx. Phase 17 two, the acid rain is the following year, 2,000, 18 so we'll see some additional benefits from SO2 19 reductions following the suit. The discussion, I 20 guess, on the deregulation relative to impacting 21 New Jersey's air quality is something that we've 22 had on our minds for a good number of years, and 23 I think our meetings through the OTAG process, or 24 ozone transport assessment group, with FERC, 25 federal energy regulatory commission, I think 13 1 John had about three of those or so, and I guess 2 we were on two tracks, we never seem to be able 3 to engage FERC on the front end with independent 4 meetings with the emissions issue directly, even 5 though they did an environmental impact study, 6 there were some assumptions in that study which I 7 think were on the positive side from their 8 perspective on what would happen to air quality. 9 So this whole process involved, I think OTAG kept 10 pressure on that process, that ultimately the 11 council of the environmental quality that serves 12 the president on the environment, and Carol 13 Browner and FERC really came to a consensus. 14 OTAG modeling said there was about three million 15 tons of transport, and the consensus was, in a 16 letter to OTAG from the administrator, said that 17 we're going to reduce two million tons of that 18 transport. So the northeast was going to get, 19 essentially, a million tons of net transport. 20 And this decision and letter probably goes back 21 the best part of 18 months or so. So I think 22 that sort of, in a way, set a little bit of the 23 tone for the OTAG process. And as you know, OTAG 24 came to a near consensus vote of thirty-two to 25 five out of the 37 states recommending to EPA 14 1 that regulations be put into effect that reduce 2 air emissions from 55 to 85 percent from the 1990 3 inventory levels. And that was a pretty 4 significant recommendation, that modeling went to 5 EPA. They worked on finer grid modeling, and I 6 think their SIP call is very supportive of the 7 OTAG work and a finer resolution from a grid 8 perspective of what the impacts on individual 9 states really mean. There's a huge controversy 10 on the SIP call, and that will go on for probably 11 another year or so. But I can tell you that 12 we're very satisfied with process, we think it's 13 the beginning of our way to address the eight 14 hour standard. There's a lot of other work that 15 we have to do to address that standard, but 16 certainly the SIP call is the heart of soul of us 17 being able to achieve health base standard in New 18 Jersey. The electric discount and energy 19 competition act is a massive and over arching 20 legislation with significant implications for New 21 Jersey's economists. It deregulates the energy 22 industry and transforms the marketplace from a 23 closed monopoly to an open competitive market. 24 It's broader in scope and will set a motion a 25 transition from a fully regulated industry to a 15 1 competitive power supply marketplace. It will 2 need to do this while preserving reliable power 3 supply and delivery systems at the same time, 4 while providing fair treatment to all 5 stakeholders during the transition. It's a 6 complicated process, and many of you who have 7 spent sometime reading the legislation are 8 probably as confused as I am. But it's the 9 environmental aspects that we're here today to 10 discuss. The part of the deregulation law that 11 is intended to mature the improved energy 12 efficiency and demand side management remain a 13 part of the state's long term energy efficiency 14 strategies for all New Jersey consumers. 15 Important parts of the deregulation law address 16 changes in technology, and the mechanisms to aid 17 in the delivery of cleaner renewable sources of 18 energy within the competitive marketplace. We're 19 here to talk about the piece of the deregulation 20 law that establishes a process to prevent any 21 adverse impact on environmental quality in the 22 state. This act now means that you and I 23 individually, and collectively as businesses, the 24 general public and government will now have to 25 make decisions on how to use energy. In these 16 1 decisions we need to consider the environmental 2 impact and benefits of those decisions. While 3 the entire bill has many aspects, there are four 4 main areas of the deregulation bill that interact 5 with our environmental goals. Environmental 6 disclosure, renewable portfolio standards, 7 emissions portfolio standards and renewable 8 energy technology and energy efficiency funding. 9 And before I discuss these areas and how the DEP 10 can assist the BPU in this process, I want to 11 talk about the marketplace initiatives that we 12 have implemented at DEP. New Jersey has 13 implemented an open market emission trading 14 program for NOx and VOC. And NOx credits 15 currently trade for close to a thousand dollars a 16 ton and VOC credits trade for a little over two 17 thousand dollars a ton. And we probably, last 18 count, have something a little over 22 hundred or 19 is it 22 thousand tons of credits, both NOx and 20 VOC. So people have used the incentive to 21 generate reductions above and beyond their permit 22 levels to generate. We intend to utilize those 23 same market forces to advance the voluntary 24 greenhouse gas action plan. In a non-regulatory 25 approach, the GHG action plan sets a 3.5 percent 17 1 reduction over 1990 levels by the year 2005. We 2 expect to achieve these reductions through what 3 we have termed no regrets options. These options 4 we believe are doable and will be cost effective 5 as well as economically beneficial. Another 6 market force at DEP is a program to promote 7 environmental technologies. The basis for the 8 program is documented through verification by a 9 third party independent entity, the New Jersey 10 Corporation for Advanced Technology. NJDEP 11 certifies the overall performance of a technology 12 to meet the highest environmental standards and 13 minimize any impacts to the environment. With 14 the verification of the performance of 15 technologies to do better than the standards, we 16 will still work within the state and through 17 interstate reciprocity to breakdown regulatory 18 barriers to promote and apply these cleaner 19 technologies. I hope that many of you have the 20 environmental expo on your agendas, you'll see 21 some of these technologies at the expo. And 22 that's April 20 and 21 at the convention center 23 in Atlantic City. I think at this point there's 24 about 85 venders supplying various types of 25 technologies. You can see from the slide that 18 1 was up there a minute ago our basic distribution 2 of sources of emission reduction is pretty well 3 distributed among the six generations of green 4 house gases. And transportation certainly plays 5 a big part of automobiles and fuels. Government 6 has its own impacts and we put the municipal 7 waste category under government. We have a lot 8 of landfills that generate a lot of CO2 methane 9 and VOC's, and we've targeted them as part of our 10 inventory reduction for not only leachate 11 collection and capping and methane gas 12 utilization as well. Agriculture land use, the 13 industrial commercial sites, retail manufacturing 14 and certainly the residential has a major impact 15 as well. So we've distributed the impact I think 16 pretty well in what we call no regret 17 strategies. New Jersey's action plan, which was 18 one in the same with the greenhouse gas program, 19 we look at CO2 as an umbrella pollutant. It 20 impact toxics, as well as our clean air act 21 pollutant. We're in the process of refining or 22 base line inventory and our emissions data and 23 this is a lot of good work. The fellow putting 24 the slides on the screen, Mike Linka, he works 25 under our science and research division. And I 19 1 tell you there's a lot of people who are putting 2 a lot of work into this effort and what we can 3 get in reductions through an effective greenhouse 4 gas program. Again our target is three and a 5 half percent below the 1990 levels by 2005. 6 That's sort of a mid-course level in regard to 7 the international discussion that's going on. 8 The first thing we have to do is get control of 9 our increase of emissions, and the second thing 10 is get reductions. And we think 2005 is a 11 reasonable mid point force to review our programs 12 and our strategies and see how we're doing. 13 Again it is a no regrets reduction strategy, and 14 I guess the definition of no regrets, if we're 15 wrong about the science of global climate change, 16 and we try to stay out of discussions about the 17 science, because we think there's energy 18 efficiency really drives this program and adding 19 a technology component and a recycling component 20 to reach our goals supporting those 21 technologies. I think that's particularly unique 22 to New Jersey. Once in a while I forget that New 23 Jersey has a reputation of being the invention 24 state, and I think this program really challenges 25 that reputation. Again, the innovative 20 1 technology business, we're going to see something 2 very quickly in Atlantic City. We've got, the 3 last count, 27 states and at least four foreign 4 countries attending that event. And we think 5 you'll see some of the cutting edge technologies 6 that we think are a logical part of this 7 program. And of course outreach and educational 8 programs is the key part of any strategy to 9 reduce emissions, and that's something we're 10 going to spend a lot more time on. The 11 marketplace forces of emissions trading programs 12 and our innovative technology program can be 13 coupled with portfolio standards. The renewable 14 energy technologies created by the deregulation 15 law are a double savings for air quality. By 16 promoting renewable energy technologies we get 17 collateral benefits for emissions reductions in 18 all sectors of our economy. Simply put, CO2, 19 NOx, SO2, hazardous air pollutants and discharges 20 are products of inefficient production of energy. 21 We can no longer afford to dump waste products 22 up the stack without extracting their full energy 23 value. We can no longer afford to pass along the 24 costs of that inefficiency on to someone else. 25 Let's quickly overview each of these components. 21 1 Environmental Disclosure, Environmental 2 disclosure is a key outreach and education 3 measure. All consumers of electricity in New 4 Jersey will receive standardized information to 5 allow them to compare and purchase electricity 6 just like any other commodity. Included in this 7 will be information on the environmental impacts 8 of the energy being offered, so consumers may 9 take the environmental information into 10 consideration when choosing their power supplier. 11 Environmental Disclosure Label, a standardized 12 label will include information on: Fuel mix, 13 renewable energy sources; the air emissions of 14 the generating unite, carbon dioxide, oxides of 15 nitrogen, and sulfur dioxide, as reported and 16 verified by each electricity suppliers; the 17 retirement of emission credits and the avoided 18 emissions from energy conservation or energy 19 efficiency projects. You can see how the market 20 forces of NJDEP's Green House Gas Action Plan and 21 OMET tie into deregulation labeling. They are 22 one and the same. The electric suppliers may 23 split up their energy portfolio of power supply 24 to produce energy products with different 25 environmental characteristics and market them 22 1 independently. Low emission products can be 2 thought of as Green Power. To qualify as Green 3 Power product, emissions of all the listed air 4 pollutants would be labeled below a benchmark 5 level. I'll get to benchmarks later. One of the 6 key points in the legislative mandate to prevent 7 adverse environmental impacts is the flexibility 8 built into the law to potentially add any other 9 air pollutant. Both the BPU and DEP must make a 10 finding of need and establish the availability of 11 data in order to proceed. Renewable portfolio 12 standards, let's turn to the second major 13 component of legislation, renewable portfolio 14 standards. The overhead shows the current fuel 15 mix percentage for the Pennsylvania, New Jersey, 16 Maryland control area. Note the high percentage 17 of nuclear fuel usage, 34 percent, and the even 18 higher coal, 45 percent, usage. Oil, gas, 19 hydroelectric, and waste to energy, or methane to 20 energy, the remainder. Over the next 25 years, 21 the decommissioning of nuclear power plants may 22 result in a shift, upward in emissions associated 23 with power generation. If that replacement 24 energy is coal-fired plants, from predominately 25 out-of-state facilities upwind of New Jersey, our 23 1 baseline air quality could be negatively 2 impacted. That is why the OTAG recommendation by 3 the state's and EPA's SIP Call is so critical to 4 New Jersey. Natural gas will also play a 5 significant role with 3100 megawatts already in 6 the permitting process and another 1500 megawatts 7 on the way. I believe this is good news for New 8 Jersey air quality. Still, other alternatives 9 are needed to ensure that the power brought on 10 line is clean power. That's why the Renewable 11 Portfolio Standard is so important. There are 12 incentives in the law to encourage development 13 and implementation of clean, renewable energy 14 sources. The incentives include funding projects 15 through a societal benefit charge. Currently, 16 the BPU, in consultation with the DEP, is 17 undertaking a comprehensive resource analysis to 18 determine the incentive funding levels for Class 19 1 renewables and energy efficiency programs. The 20 goal of this analysis is to insure that we 21 encourage the most effective strategies for 22 obtaining clean power. The law establishes two 23 classed of renewable, and these definitions allow 24 us to align with other states such as 25 Massachusetts and Connecticut. Class 2 24 1 renewables are currently economically available, 2 while class 1 renewable will, in some cases, 3 require assistance to be fully commercialized. 4 This funding for assistance to fully 5 commercialize class 1 renewable technologies 6 starts at 25 percent of the current Demand Side 7 Management funding and will increase over time to 8 up to 140 million dollars per year. There is no 9 funding assistance for class 2 renewables. The 10 renewable energy portfolio standards for class 1 11 and 2 technologies as provided by law reflects 12 the backloading of the more technological 13 challenging class 1 renewables. The standards 14 for class 1 renewables will increase at 0.5 15 percent in 2001 and increase to 4 percent in 16 2012. Assuming energy demand will increase at 17 the current rate in New Jersey, renewable energy 18 will provide 800 megawatts of power by 2012. 19 This is comparable to the total megawatts 20 provided in both Massachusetts and Connecticut 21 deregulation bills, although the actual 22 percentages are different. This funding 23 assistance should help energy suppliers meet the 24 renewable energy portfolio standards. Another 25 incentive, known as net metering, will allow 25 1 small residential and commercial customers who 2 generate electricity, using wind or solar power 3 for their homes and small businesses to reverse 4 energy to the power grid and to be paid for this 5 generation. Emission portfolio standards, the 6 third and final major environment component of 7 the law. New Jersey will be put in a challenging 8 position to attain the new 8 hour ozone public 9 health standard that has been adopted by EPA. 10 Our current attainment state implementation plan 11 shows, even after implementation of the NOx OTAG 12 SIP Call by USEPA, and the Ozone Transport 13 Commission's Phase 2 and phase 3 NOx standards, 14 that obtaining this standard will be difficult. 15 Air quality is improving, and the attainment 16 State Implementation Plan demonstrates attainment 17 with the one hour ozone standard. Our challenge 18 is to achieve the further emission reduction 19 needed to attain the 8 hour standard. As a 20 guiding principle, these emission reductions 21 would ideally be enacted by the federal 22 government on a nationwide basis or at the very 23 least, regionally. New Jersey is committed to 24 move forward with its standards in tandem with 25 its neighboring states. The new legislation 26 1 helps us to do so through the concept of Emission 2 Portfolio Standards. Both Massachusetts and 3 Connecticut have enacted energy deregulation laws 4 and both contain Emission Portfolio Standards. 5 We have been working with those states to develop 6 consistent principles for which regional emission 7 portfolio standards can be enacted. Indeed, the 8 required model Emission Portfolio Standard is one 9 of the options BPU has proposed for the benchmark 10 that will be used for defining Green Power for 11 environmental disclosure purposes. The overhead 12 illustrates this option, and the model emission 13 portfolio standards are compared with the current 14 PJM average. I think we must all recognize that 15 the road ahead will be a challenge for New 16 Jersey. Modifying the current fuel mix will 17 require a major commitment to new clean 18 technologies. Renewables, energy conservation 19 and innovative technologies for cleaner gas, oil, 20 yes, even coal, will require major investments 21 from all of us, government private industry, and 22 the public. I believe we are up to the challenge 23 and when all is said and done, we will enjoy 24 cleaner air and water in New Jersey and will have 25 no regrets about the commitments that we're 27 1 making today. Thank you very much. 2 MR. BERKOWITZ: Are there any questions 3 from the council for the commissioner, please? 4 MR. PALMER: What is the reason that 5 there's a lot more potential from that pipe shark 6 in the commercial area than there is in 7 industrial? 8 MR. SHINN: I think when we--there's more 9 potential unknown than there is known. And when 10 you go into the different areas when we try to 11 put our inventory to match the pie chart, we can 12 schedule a future session we can talk about what 13 the actual reductions. I think we're going to 14 see certain areas of the pie chart where there's 15 a lot more potential, but this concept is really 16 driven by the four elements, energy conservation, 17 innovative technology, pollution prevention, 18 recycling are the four drivers behind this 19 program. Some can be more successful than 20 others. And where the success is resulted in 21 increased reductions, could very well be the 22 commercial residential section because a lot of 23 emissions come from the two categories that you 24 saw on the chart. So if we do a good job on our 25 education program, you'll see better results in 28 1 those areas. It depends what kind of technology 2 emerges, what kind of by-ins we get from the 3 programs and what kind of incentives we can 4 produce to get participation. And tell the 5 public that you can make a difference in your 6 purchases, particularly in the two cycle engine 7 area, and that goes from lawn mowers to weed 8 whackers, to outward motors. There's a lot of 9 emissions in those kind of areas, how we can 10 impact those is still a little bit of a question 11 mark, but certainly they're one of the targets of 12 this program. So I agree with you. I think 13 we'll see some areas that exceed our 14 expectations, and hopefully, none that are lower 15 than our expectations, because I think we've got 16 a pretty balanced approach. And I think 17 depending how we marshal our resources, will sort 18 of determine how we are in 2035 when we look at 19 our mid course direction. But I think if we 20 arrive at our three and a half percent reduction 21 at 2005, I think getting the rest of the way will 22 be relatively downhill, if you will. I think the 23 additional three and a half percent to meet the 24 goal for 2012, we'll be in pretty good shape to 25 achieve. But the connections and the linkage to 29 1 both air toxics and other clean air act mandates 2 are really striking as you go through this 3 inventory and apply the technology piece. So 4 we're pretty comfortable with the program at this 5 point. It's still developing at a pretty 6 comfortable approach. Thank you all. 7 MR. BERKOWITZ: Further questions? Thank 8 you very much for your time. One request, if we 9 can have copies of your overheads, we'd 10 appreciate it very much. Our next speaker is 11 Richard Bagger, prime sponsors of the electrical 12 deregulation. 13 MR. BAGGER: Good morning. I appreciate 14 the invitation to join you at this hearing today 15 to talk about the environmental aspects of the 16 energy deregulation legislation and how it 17 impacts clean air in New Jersey from a 18 legislative perspective. Let me begin by 19 congratulating the Department of Environmental 20 Protection Commissioner Shinn for the steps that 21 have been taken to improve air quality in New 22 Jersey generally throughout the past six years 23 that I believe you've been commissioner. 24 Overall, air quality in New Jersey has been 25 improving. And in 1998, there were fewer 30 1 unhealthful air quality days than there were in 2 previous years. Some years we had more than 30 3 days during the year, the equivalent of a month 4 per year, when the qualities of our air in New 5 Jersey was unacceptable. Last year that number 6 was greatly reduced and our state met air quality 7 health standards throughout 1998 for four of the 8 six major air pollutants, the two exceptions 9 being ozone and total suspended particulates, but 10 the record shows progress as measured in the 11 quality of our air, and that is something that we 12 should be grateful for. That is the result of a 13 coordinated effort on the government and 14 industry, the air pollution from both industrial 15 sources and mobile sources has been reduced as a 16 result of more efficient manufacturing processes, 17 the removal of pollutant source materials, and 18 improved methods for removing containments before 19 they're released to the air. In this decade 20 we've seen significant reductions in industrial 21 emissions in New Jersey of two types of smog 22 forming pollutants, VOC's and nitrogen oxides, 23 NOx. And in addition, federally mandated acid 24 rain controls sulfur dioxide in New Jersey and 25 neighboring states. So progress has been made. 31 1 And progress has also been made in New Jersey as 2 a result of very strong air quality standards 3 that exist for the generation of electricity in 4 our state and they're understandable concerns 5 that exist now and existed as we were fashioning 6 the electric deregulation to make sure that the 7 progress we have made in this state in a totally 8 regulated system for the electricity was 9 maintained in a deregulated environment. That 10 posed quite a challenge for the legislature in 11 fashioning the electric deregulation 12 legislation. Whenever this issue came up, I 13 always took great pains to make sure that people 14 understood that prior to the enactment of this 15 legislation, electricity was competitive at the 16 wholesale level. The result of this legislation 17 is that electricity is competitive at the retail 18 level. The electricity used in any of our homes 19 or businesses or government offices in New 20 Jersey, may already have been generated outside 21 of New Jersey, not subject to New Jersey's air 22 quality standards. Because that power was 23 purchased in the wholesale marketplace at the 24 best wholesale rate available through the PJM 25 power pool. The change that we are making now is 32 1 that there will be retail choice for electricity, 2 because the same issues of so-called dirty power 3 from outside of New Jersey existed in the 4 wholesale marketplace that now we are trying to 5 confront in the retail marketplace. Commissioner 6 Shinn spoke about the provisions of bill that 7 I'll just touch on briefly, and that impact 8 environmental issues and they fall under three 9 categories; consumer disclosure, because of the 10 actual power of consumer choice at the retail 11 level will allow individuals in New Jersey to 12 shop around for clean power, something they 13 didn't have the choice to do before, when the 14 decision was being made strictly in economic 15 terms at the wholesale level and they had no 16 retail choice. The second is the authority that 17 exists under this legislation for the board of 18 public utilities to create emissions portfolio 19 standards. And the third are the mandates 20 imposed by the legislation for renewal energy, 21 and I'll discuss them each briefly. The new 22 legislation requires that everybody who sells 23 power in New Jersey, both the utilities and their 24 competitors, the competitive power suppliers, 25 will be required to disclose on their bills, 33 1 their contracts and their marketing materials, a 2 uniform set of environmental characteristics, 3 including fuel mixes and emissions, so that 4 individual consumers will be able to buy green 5 power if that is what they choose to do. To 6 implement this, because this is harder to do in 7 practice than it sounds, we are requiring and 8 have required the board of public utilities to 9 adopt standards in consultation with the DEP to 10 implement these disclosure requirements, 11 including a methodology for emissions disclosure 12 based on output in to our air of megawatt hour 13 and bench marks to allow consumers to perform a 14 meaningful comparison between suppliers because 15 that can prove to be quit difficult in practice, 16 and a uniform format for disclosing the 17 emissions, which is graphic in nature and easily 18 understandable. What comes to my mine is when 19 you buy a new car, there are standards for the 20 uniform reporting of miles per gallon. And I 21 hope to see a similar easy to understand and 22 uniform measure of environmental quality of the 23 energy that we're purchasing in New Jersey. And 24 we've required the BPU to implement that with the 25 assistance of the DEP is going to be very 34 1 important in making that happen. Second 2 environmental aspect of this legislation involves 3 emissions portfolio standards, and it's two part 4 provision. First, we have empowered the board of 5 public utilities to adopt an emissions portfolio 6 standard for all suppliers of electricity in New 7 Jersey, the utilities and their competitors. 8 They can do that now. Under the legislation, we 9 have authorized the board of public utilities, if 10 they make a finding that emissions portfolio 11 standards are necessary to either meet federal 12 clean air act, or state requirements for air 13 quality, the board is empowered to put in place 14 emission portfolio standards which will set a 15 floor in terms of environmental quality for 16 the--for all the power sold in New Jersey. The 17 second provision in the new law that relates to 18 an emissions portfolio standard is a provision 19 that we borrowed from the Connecticut legislation 20 to deregulate electricity, and that is to 21 encourage regional emissions portfolio 22 standards. Now, our energy region includes 23 Pennsylvania, New Jersey and Maryland, the PJM 24 pool. So this legislation has a requirement that 25 if Maryland and Pennsylvania move to have an 35 1 emissions portfolio standard, then New Jersey 2 must create an emissions portfolio standard so 3 that we have a regional standard for clean 4 power. At potential shortcoming of this 5 provision, and any good sponsor will recognize 6 the shortcomings as well is the other 7 provisions. Pennsylvania probably is not 8 terribly incentivized to create an emissions 9 portfolio standard, because Pennsylvania is a 10 state in which some of the electricity that is 11 generated would not meet those standards. So it 12 is probably not likely that Pennsylvania, New 13 Jersey and Maryland will create a regional 14 emissions portfolio standard. Which, as I'll 15 mention, I think we need to look for stronger 16 federal action to push those states that don't 17 have a strong incentive to raise their standards 18 to have the federal government move states toward 19 a higher standard. The third provision in the 20 legislation that addresses the environment is the 21 renewable energy requirement. And I thought it 22 was a sensible approach in the legislation to 23 separate different forms of renewable energy into 24 class one or class two. Class one is the classic 25 renewable energy sources, the solar, I'll call 36 1 those the pure renewable energy, and those enjoy 2 a favored status under the legislation. And, in 3 fact, the renewable energy from those sources is 4 required to increase by half a percent each year 5 through the year 2,000--excuse me one percent of 6 our energy by the year 2,006. Class two is hydro 7 power and also waste to energy. And that class 8 two, while it's not pure renewable energy, does 9 give a somewhat favored status to the electricity 10 generated by resource recovery facilities in New 11 Jersey, which we're, after all, essentially 12 mandated by the State of New Jersey and the 13 Department of Environmental Protection during the 14 1980s and by assuring a market for the 15 electricity generated by those resource recovery 16 facilities helps with another environmental issue 17 our state is facing and that is our solid waste, 18 crises may be too strong a word, but the response 19 of the state to the overturning of the system and 20 solid waste regulation that have been that place 21 for twenty years. 22 MR. BERKOWITZ: Three minutes Assemblyman . 23 MR. BAGGER: Okay. The last provision of 24 the legislation that pertains to environmental 25 quality is maintaining current funding for energy 37 1 efficient programs and requiring that of that 2 existing funding at least 50 percent be dedicated 3 to new energy efficiently and renewable energy 4 programs. Right now New Jersey residents make 5 the highest per capita commitment to clean 6 energy, any consumers in the country we have the 7 highest per capita charges on our bills for clean 8 power. And this legislation continues those 9 investments at current levels. There were those 10 who asked us to increase the level of commitment 11 in rate payers bills to clean energy, but a part 12 of our effort here was to lower the cost of 13 energy in New Jersey. So we simply maintained 14 the commitment at current levels, which, after 15 all, is the highest level and is about three 16 times the per capita in the state of California, 17 which is the second highest investment of any 18 state in the nation. Let me just conclude by 19 endorsing a call for stronger federal standards 20 in this area. We have very high standards in New 21 Jersey, many of the generation plants in other 22 parts of the country are old and fueled by coal, 23 would not satisfy New Jersey requirements, 24 anywhere close to New Jersey air quality 25 requirements, but yet we already are faced with 38 1 the environmental problems from those plants 2 because the pollutants are carried into our 3 state. With the national movement towards 4 deregulation of electricity, it's more important 5 than ever that the federal government requires 6 standards that match New Jersey's demanding air 7 quality standards, and that they be national 8 standards. I know the New Jersey DEP and 9 Governor Whitman advocated stronger federal 10 standards at the national level. This passed 11 September the environmental protection agency 12 issued an order which controls midwest power 13 plants. That's an important, very significant 14 step in the right direction. And we just need to 15 if continue to be vigilant in persuading the 16 federal government to make a clean air standards 17 for all states that meets New Jersey's existing 18 high standards for air quality. Thank you very 19 much for the opportunity to speak this morning. 20 MR. BERKOWITZ: Any questions from the 21 council? 22 MR. MANGANELLI: I have one. 23 MR. BERKOWITZ: Dr. Manganelli. 24 MR. MANGANELLI: I gather in the bill that 25 a municipality can pull together the energy 39 1 requirements of the town and it seems trying to 2 get better prices, as well as, I just read 3 recently, that some school districts also intend 4 to do this. I was wondering whether there was 5 conflict of that. And the second part of my 6 question is, you also have in your bill about 7 public education program, I'd like to hear a 8 little bit about how that's going to work. 9 MR. BAGGER: Those are two different 10 issues. The first is demand side aggregation, 11 the legislation permits, essentially any 12 association or government entity to be an 13 aggregator, to pool together voluntarily groups 14 of consumers to get the buying power and the free 15 market of a large consumer. So the aggregator 16 could be a municipality for its own facilities 17 and for participating residents in the 18 community. It could be, for example, the New 19 Jersey school boards association on behalf of all 20 public school districts in New Jersey. It could 21 be a business association on behalf of all the 22 member businesses and industries. It could be 23 conceivably an association of individuals like 24 the AARP on behalf of a group of individual 25 residents. We have created a system where we may 40 1 have multiple aggregators continuing to sign 2 people up to be in a power pool to get a 3 favorable rate, which I think is one of the very 4 advantageous provisions. The second thing you 5 mentioned is a program that is required of public 6 education because this is a significant change in 7 how all of us have interacted with our utility 8 and how all of us have thought about 9 electricity. So we have directed the board of 10 public utilities to undertake a consumer 11 education program in order to prepare all of us 12 for a competitive environment that is going to 13 begin this August. 14 MR. BERKOWITZ: Any other questions from 15 the council? If not thank you very much for all 16 your efforts and thank you for being here today. 17 MR. BERKOWITZ: We'll skip over 18 Assemblywoman Murphy. John Wisnewski. 19 MR. WISNEWSKI: Thank you. I'd like to 20 first thank you and the council for the 21 opportunity to appear here today and at least 22 make my views known on the impact that energy 23 restructuring, and that's what it really was 24 restructuring, not deregulation has on our state 25 and its environmental quality. It's unfortunate 41 1 that when we looked at restructuring, 2 deregulation, whatever you'd like to call it, 3 that it was looked solely as a means of reducing 4 electrical rates for the people of the state. 5 And a lot of other implications of restructuring 6 were not even primarily considered in the passage 7 of the bill. And in saying that, I do not want 8 to take away from Warren Pune, in any way, the 9 hard work that my colleagues like Rich Bagger, 10 Paul D'Catano, Carol Murphy and a whole host of 11 other member of the assembly had in putting 12 together the energy deregulation restructuring 13 bill, because it was a mammoth task. And 14 invariably, in a project of that size, all of the 15 aspects that should be considered probably 16 aren't. And I, as one member of the assembly, 17 along with many of my colleagues, had urged that 18 the legislature take a much slower approach to 19 restructuring so that many of what the, may 20 become unforeseen issues of restructuring, could 21 have adequately been addressed prior to final 22 adoption of that legislation. Certainly the one 23 issue that brings us here today is the impact 24 that restructuring has on air quality, 25 environmental quality in this state. And 42 1 although the prospects of cheaper power is 2 something that the industrial, the commercial, 3 the business community of this state welcomes, it 4 is something that the environmental community has 5 often held in perhaps somewhat disbelief that we 6 could have cheaper power and at least a status 7 quo in terms of our environment. The whole 8 notion that we can open up or markets to 9 competition for electricity presupposes one very 10 important fact, that there is cheaper power else 11 where that can be purchased and transmitted to 12 this state. Indeed, if that weren't the case, 13 there would have really been no compelling 14 argument to deregulate, to restructure the 15 markets, because it wouldn't have provided any 16 economic good, it would have just simply been an 17 act of legislatures changing the periods and the 18 commas in the law but not providing anything. 19 The issue was driven by the fact that there was 20 cheap power. That cheap power does not come from 21 New Jersey, it comes from out of state. The 22 cheap power coming from out of state is generally 23 generated with far dirtier standards than we have 24 here in New Jersey. Thus, the question that is 25 raised by many critics of the legislation is that 43 1 in trading off cheaper power, are we there by 2 giving up environmental quality that so many 3 people have worked for in this state for several 4 decades? And the answer has to be invariably, 5 yes, that one of the consequences of this will be 6 that by making New Jersey the destination market 7 for dirty power for the midwest, we are going to 8 be adding to the NOx and VOC's in the air that we 9 try to keep out. Now in the legislative debate, 10 we tried, members in my caucus tried to sponsor 11 legislation that would have done a couple of 12 things. Certainly would have required labeling 13 of the power, that was done, you have to know 14 what components your power has. We also wanted 15 to provide an economic disincentive so that dirty 16 power from out of state was no more economically 17 advantageous than clean power within the state. 18 Unfortunately, it had that dirty word attached to 19 it, tax. The members of my caucus and myself and 20 a whole host of other members proposed that dirty 21 out-of-state power should have a higher tax 22 imposed on it so that we can at least put that 23 power on an equal footing with instate power. It 24 would have the purpose of doing a couple of 25 things, providing an economic disincentive for 44 1 that dirty power. But also, putting the New 2 Jersey producers on an equal footing. Certainly, 3 if you can buy power out of state at ten, twenty 4 or thirty percent cheaper than you can get it 5 instate, instate producers are going to be at a 6 disadvantage from those out-of-state producers. 7 And ultimately, if you take those scenarios and 8 play them out, we will be loosing business 9 instate for out-of-state interest. That did not 10 happen. But I think we need to look at ways of 11 making that happen. Certainly, it is true that 12 no matter what we do in New Jersey, those plants 13 will continue to exist. But somebody has to take 14 the first step. And there is a notion out there 15 that if we propose legislation, that if several 16 states were to take the step to do this 17 simultaneously, we would achieve the end of 18 limiting the amount of dirty power. The problem 19 is, is that everybody has a you go first 20 attitude. So New Jersey will say to New York, 21 that's a great idea, you go first, we'll follow, 22 and Pennsylvania, and ultimately it doesn't 23 happen. Somebody has to be the leader. New 24 Jersey, for the last several decades, has been a 25 leader in the northeast on environmental quality 45 1 and environmental standards. I would argue that 2 we should continue to stick by that, and I know 3 that while it may, in the short run, produce some 4 greater costs--or I shouldn't even say that. In 5 the short run it would eliminate some of the 6 savings that people could obtain through 7 deregulation. In the long run, it's going to 8 provide much greater economic good because it's 9 going to not only protect our environment, but 10 it's going to place the producers in this state 11 on an equal footing with the producers out of 12 state, and that means jobs and that means 13 economic opportunity and activity. And that is 14 certainly something that was ultimately the goal 15 of the deregulation bill. Let me conclude by 16 thanking the Council once again for the 17 opportunity to be here today. I always 18 appreciate any effort to share views on this. A 19 lot of people, at the end of the day weren't 20 happy, and many people say if everybody's unhappy 21 with about a bill, it must be a pretty good 22 compromise. I think all things being equal, it's 23 better than where we started, although we have 24 much work to be done. 25 MR. BERKOWITZ: Questions from the 46 1 council? 2 MR. MANGANELLI: This disincentive tax that 3 you will put on, will that provide via 4 disincentive for industry commercial to come into 5 and develop here in New Jersey. 6 MR. WISNEWSKI: Well, it certainly could be 7 viewed as a disincentive to come to this state, 8 but it's not changing any of the requirements we 9 have already. So if you're company that wants to 10 build a merchant plant in New Jersey, that tax is 11 not going to effect you because if you're going 12 to locate to New Jersey, you're going to have to 13 meet all of our requirements to begin with. It 14 may, in fact, have the added benefits of helping 15 you competitively because those competitors out 16 of state that might be able to generate more 17 cheaply are going to be forced to bare some of 18 the costs that you have to bare to meet the 19 environmental standards in New Jersey. Thank you 20 Doctor, thank you. 21 MR. BERKOWITZ: Any other questions? Thank 22 you very much, Assemblyman I appreciate it. 23 There will be a lunch break. I've been informed 24 there will be a lunch break, and that will be at 25 1:00 so you can plan accordingly. Assemblywoman 47 1 Carol Murphy is not with us yet so we'll move 2 along to Elizabeth Murray. Is she present? 3 Chief of Staff for BPU. Is there a member from 4 BPU who wishes to present testimony? 5 (No response) 6 MR. BERKOWITZ: Is Glen Weiss in the 7 audience? 8 MR. WEISS: Yes. Good morning. I'm on a 9 little sooner than I thought. On behalf of the 10 PJM Interconnection Organization, I would like to 11 thank you for this opportunity to testify at this 12 public hearing on the New Jersey Clean Air 13 Council. PJM was founded in 1927 and has evolved 14 over seven decades as the commercial and 15 regulatory environments have changed. PJM is 16 responsible for the operation of the largest 17 centrally dispatched electric system in North 18 America. As the nation's first fully functional 19 Independent System Operator, PJM ensures the 20 delivery of electric power to over twenty-three 21 million people in Pennsylvania, New Jersey, 22 Maryland, Delaware and the District of Columbia. 23 The PJM Open Access Tariff, approved by the 24 Federal Energy Regulatory Commission, has 25 authorized the PJM Office of the Interconnection 48 1 to operate the bulk high voltage transmission 2 system that is owned and maintained by the PJM 3 regional transmission owners. This high voltage 4 transmission grid consists of over 8000 miles of 5 high voltage transmission circuits, which 6 interconnects generators to load centers 7 throughout the PJM service territory and to the 8 eastern half of the United States and Canada. 9 The PJM operations control center administers 10 bid-based wholesale markets, in which 11 participants buy and sell electric energy and 12 generating capacity. PJM coordinates the 13 operation of 540 generating units within the PJM 14 control area for a total of over 58,000 megawatts 15 of generating capacity. PJM's market 16 participants buy and sell electric energy from 17 the generating units located within the PJM 18 service territory and from other areas of the 19 United States and Canada. Through this continual 20 shopping for power in the hourly spot market, PJM 21 facilitates a competitive and robust energy 22 trading market. Thus, some of the energy 23 consumed by New Jersey customers may be purchased 24 from generators in other areas of the country or 25 New Jersey generation could be sold to other 49 1 areas of the country. Participants in the PJM 2 markets now exceed 130 members representing every 3 segment of the electric power industry. 4 Membership includes investor owned utilities, 5 independent power producers, federal power 6 marketers, transmission owners, load aggregators 7 for retail choice and other users of electric 8 power. PJM's market has become one of the most 9 liquid and active energy markets in the United 10 States. PJM is respected throughout the world as 11 a leader in the use of advanced technology to 12 support this robust and nondiscriminatory and 13 competitive energy market. The average monthly 14 purchases and sales within PJM are nearly nine 15 million-megawatt hours. A growing number of 16 these energy transactions are purchases of energy 17 from external generators and sales of energy for 18 consumption outside the PJM territory. In 1998, 19 the marketplace became increasingly deregulated, 20 making it more important for PJM to rapidly adapt 21 to changes and be responsive to the needs of the 22 marketplace. PJM maintained a competitive 23 environment that offered an efficient energy 24 pricing model and equal opportunity for all 25 providers regardless of size. Three of the most 50 1 notable achievements in 1998 were: 1, initiating 2 the nation's first location specific energy 3 pricing system called Locational Marginal Pricing 4 better known as LMP that allocates transmission 5 congestion costs fairly among all transmission 6 customers. Two, facilitating Pennsylvania's 7 Retail Choice program, which helped the end user 8 customers select their electric providers. 9 Three, developing a Visible Capacity Market to 10 give retail choice providers of all sizes greater 11 flexibility in meeting generation capacity 12 requirements to serve their load 13 responsibilities. Expanding on a yearlong 14 customer choice pilot program, most of 15 Pennsylvania's end users gained the right to 16 select their electricity providers as of January 17 1, 1999. This choice included at least--in my 18 notes I have at least one, but it's three, 19 providers of green power. These developments had 20 significant implications for the electric power 21 industry. The PJM Office staff worked closely 22 with members and regulators to facilitate 23 implementation by: One, providing transmission 24 and market access for new companies, enabling 25 smaller utilities to acquire adequate capacity to 51 1 compete. We track dynamic shifts in service 2 responsibilities as consumers exercised their 3 choice to select electric suppliers. And finally 4 we accommodate the needs and views of a rapidly 5 expanding list of PJM members, which included 6 establishment of the End-Use Customer voting 7 sector representation. I hope it's clear from my 8 statements that PJM Independent system operator 9 is about choices. The PJM energy market in the 10 last two years has undergone many changes to 11 allow participant choices for energy transactions 12 on both wholesale and retail basis. How will 13 deregulation change New Jersey's energy mix? 14 Question one in the program. The answer lies in 15 the choices that are available to the end users. 16 In the coming year, PJM, in collaboration with 17 state regulators and market participants, will 18 continue to develop innovative solutions to meet 19 upcoming challenges including the introduction of 20 Retail Choice in New Jersey, Delaware, Maryland, 21 and parts of Virginia. Thank you again for this 22 opportunity. 23 MR. BERKOWITZ: Thank you. Questions? 24 MR. ZONIS: Mr. Weiss, I think that the PJM 25 Interconnection does a marvelous job of meeting 52 1 what it's considered to be. But I also think you 2 don't have anything whatsoever to do with the 3 subject of this hearing, because PJM provides 4 economic dispatch, and I don't think you pay any 5 attention whatsoever to the environmental 6 consequences of the movement of one megawatt hour 7 of power. Certainly, you're necessary so that 8 providers of green power or relatively high 9 quality power can be made available to the high 10 voltage grid that you supplied. But is there 11 anyway for PJM to assist in the subject of this 12 hearing? How can you have a positive impact with 13 respect to the electric utility deregulation on 14 New Jersey's environment? Because it seems to me 15 I am failing to hear any contribution that PJM is 16 making to the basic problem. That you're helping 17 to transport power, no question, I think that's 18 fine and that's a necessary part of it. But the 19 consumer in New Jersey is not going to be any 20 better off. And considering the 540 generating 21 stations that you called upon, how is that going 22 to help those of us who are consumers here in New 23 Jersey make the choice that we might care to 24 make? 25 MR. WEISS: Excellent question. Part of a 53 1 successful retail implementation, I guess in any 2 state, you have to have an infrastructure on the 3 wholesale basis, I think PJM has demonstrated 4 that we have that. And in Pennsylvania, when 5 Pennsylvania came to us and initiated their 6 retail choice program, it made it much easier for 7 them to have choices for their end users to 8 supply electricity. One of the things that PJM 9 did do as far as giving choices to end users, and 10 one of those choices is to select clean power, is 11 to provide a mechanism of doing that. As far as 12 New Jersey goes, there is an initiative right now 13 with the New Jersey BPU. They've come to us an 14 asked if PJM can help become the administrator 15 for tracking generation resource and the amount 16 of pollutants that they put out. We're working 17 with the BPU on that effort. We could possibly 18 became an administrator if the agreements works 19 out for us. 20 MR. ZONIS: That's hopeful. Thank you. 21 MR. MAXWELL: Could you elaborate just a 22 little bit, how would you follow a kilowatt or a 23 watt? 24 MR. WEISS: That's a very difficult thing 25 to do, and that's part of the agreement. The 54 1 question he had is how do you track a red 2 megawatt and a green megawatt, and that's a very 3 difficult task to do. So we're putting together 4 some information right now which was a proposal 5 put before the BPU, I believe just several weeks 6 ago, to try to come up with a plan on how to do 7 that. All the answers are not known, it's very 8 difficult thing to do. I want to mention one 9 thing, a lot of information here I've heard them 10 say that power's always being bought from the 11 midwest. Now that is not necessarily true last 12 summer, we saw a tremendous amount of power on 13 the PJM system being sold to the midwest. In 14 years gone by we saw generations coming in from 15 the midwest. As markets deregulated, there was 16 huge price spikes in the midwest. A lot of PJM 17 generation was there, now one could argue that 18 generation is still returning no matter where the 19 megawatts go, the power plants are producing 20 electricity, and they have smokestacks and the 21 wind carries. We're there as a facilitator for 22 the marketplace and anything we can do we would 23 like to work with the commissions or our member 24 participants. 25 MR. BERKOWITZ: Any questions? Thank you, 55 1 Mr. Weiss, I appreciate your taking your time. I 2 understand Assemblywoman Murphy is here. 3 MS. MURPHY: I've not done this before so 4 you will have to bare with me if I seem to be a 5 little nervous, because I am. And I think what 6 I'm nervous about is the fact that one of the 7 questions you just asked the gentleman from PJM, 8 relative to what happens in other parts of the 9 United States, what other facilities are burning 10 what to develop energy for their constituencies. 11 We have some control over things like that, but 12 we don't have any real control. We can not stop 13 the air. We can not stop the winds, and we 14 certainly cannot stop the economy in any state in 15 which coal development, coal mining and coal 16 burning is an economic benefit for the people who 17 live there. And I would defy anyone to really 18 say that the State of New Jersey is going to pay 19 the salaries for all the people that would be put 20 out of work or would pay the federal government 21 to support all of these families who would be 22 impoverished, or even would expect us to find 23 other jobs, other employment for these people. 24 So I think in the sense of reality, what this 25 bill does is the very best thing it could do, 56 1 this bill encourages other companies, other 2 persons, other concepts to develop means of 3 supplying the energy that we need. This bill 4 also requires that this state support those kinds 5 of systems and those kinds of green power 6 producers that will come along. Does it say that 7 we will throw out the baby with the bath water 8 and we will say to the people of New Jersey we 9 have freed you from high prices only to make them 10 higher? Of course not. We're here to encourage 11 business, to encourage economy to develop the 12 concepts of new strategies and new ideas and I 13 think the bill does all of that very well. The 14 emissions portfolio is quite clear. The concepts 15 are laid out very concisely. We have also spoken 16 very clearly about the kind of things that we 17 would want to see and the fact that we expect 18 people to disclose these things to us so that the 19 consumers, customers can make very well guided 20 choices. But they need to be choices people can 21 afford to make, so is the consequence there isn't 22 any put aside to encourage the development of new 23 ways of finding our energy and replacing our 24 energy needs by other means. I don't think that 25 this bill is exclusive in anyway. It is not a 57 1 bill that went after negative. It's a bill that 2 has gone to positively, positively encourage and 3 support better air in the State of New Jersey. 4 Will it happen overnight? I would defy anyone to 5 say we're going to do that. I really don't know 6 how on earth you would do that, and I don't know 7 how you would measure that cleanliness. I don't 8 know what the measurement and the baseline that 9 we are looking for honestly will ever become 10 because it seems to me that man constantly 11 strives to improve whatever level we have to an 12 even higher level, and so we should. But I do 13 not think we can deny people the opportunity to 14 continue to life in finding good jobs, to using 15 their minds, to create new ideas, to strategies 16 and making them come to be while researching the 17 environment for all of us. But I do think this 18 bill with it's mythology, with its benchmarks, 19 with its kind of portfolios and controls is a 20 very good thing. So, I am delighted that you had 21 a hearing on this today. The issue of 22 deregulation, particularly of an energy industry, 23 which we all the take for granted, and which has 24 probably been the most driving force to creating 25 a movement of life, the like of which we have 58 1 never seen to allow the communication of ideas to 2 go from the written page that someone studied 20 3 or 30 or a hundred years later to the instant 4 communication where four or five people to move 5 forward the ideas and mistakes we made along the 6 way. I would tell you we would not be human 7 beings if we haven't, but they are mistakes we 8 can correct because we are human beings and 9 thinking people. I think the State of New Jersey 10 has gone very far in this bill. I think the 11 State of New Jersey has done some good and right 12 things. I will tell you gentlemen in all of the 13 aspects of this bill I truly think that the State 14 of New Jersey has done a better job than any 15 state before. And I think when the end of the 16 day comes that will be demonstrated here. And I 17 encourage your continued support that the 18 legislation bill has had. I will be happy to 19 answer questions. 20 MR. EGENTON: Assemblywoman, we were 21 reading an article here that mentioned a number 22 of other states attempted this, and in 1998 and 23 it withered, it didn't go anywhere. Do you know 24 any reason? I couldn't find in that article the 25 reason why it happened, what problems they faced 59 1 that we might face. 2 MS. MURPHY: I think one of the biggest 3 things the State of New Jersey did that no other 4 state has done was to address the tax issue. And 5 I think for New York State, particularly, when 6 they were in the middle of trying to do their 7 deregulation, setup their consumer choice or 8 customers choice, the tax issue came up and 9 everything stopped simply because they hadn't 10 looked down the line and taken the worst problem 11 first, if you will, and addressed the baseline, 12 the economic problem, before they went into the 13 deregulation. The State of New Jersey did that. 14 And I think it was one of the greatest things 15 that this state could have done in the order of 16 which we did. It makes our bill totally unique 17 from any other one. Got to watch where the money 18 goes all the time. 19 MR. EGENTON: I just want to make a general 20 comment, statement, and thank you, Assemblywoman, 21 for your leadership in ushering in that 22 legislation. And thank you for being here today 23 with us. 24 MR. MANGANELLI: This council is looking 25 into this, of course. How can we be useful, what 60 1 kind of information should we seek as the council 2 here? 3 MS. MURPHY: I think in terms of 4 deregulation, because I'm, I guess, a bit of a 5 futurist, if you will. I do believe that we will 6 come to the time when our homes will be without 7 wires, without the transmission apparatus that we 8 now have today. The future for sure. I do 9 believe that we will have a lot of things taking 10 place in our state that change the whole way 11 electricity or energy comes to us in the form 12 that it does. I think that for all of you being 13 involved with clean air, that's the thing you're 14 looking at because everything you do has an 15 impact on the air that we breathe. Anything we 16 do that changes what comes from homes of the 17 emissions that come from homes, the kind of 18 things that we develop as infrastructures, these 19 are things that will change the qualities of our 20 air also. I think it's more subtle, but I 21 honestly do believe it to be quite true. I don't 22 know, beyond what you do you should be doing. I 23 think you do a very good job and I think you look 24 at things very clearly. I think you need to stay 25 apprised of the kind of developments that are 61 1 coming from this, they will be vast, they will be 2 great and they will change our economy and our 3 whole communications system. Once again, these 4 changes are so enormous and so fast in our world. 5 MR. BERKOWITZ: I have a question. One 6 could argue that cheaper fuel equates to dirtier 7 fuel. So if you want to drive the energy costs 8 down, what will happen is we will be selecting 9 dirtier fuel. One of the components of the 10 legislation, however, is that the public should 11 be informed as to the consequences of their 12 action. What do you see the legislature's role 13 in watchdogging the efforts to guarding the 14 public education system? 15 MS. MURPHY: I'm going to take issue with 16 you, one of things this bill has done is caused a 17 stale of a lot of the older generation stations 18 that were involved in this state. Deregulation 19 will come to states further west than us when the 20 impotence is there. It is the creation of new 21 means that will change what we're doing. It 22 doesn't have to be solar, it doesn't have to be 23 hydro, this kind of containment, changes what 24 happened in the air. So the question of 25 generation, the question of coal mining, people 62 1 going away is what saves money. Will there be 2 new system in Alaska, they have coal burning for 3 a lot of the electricity and it's quite a 4 different process than is used in this country 5 today because they are newer, newer built. So 6 technology will take the place when the 7 commercial competitive input and the competitive 8 chance is there. Then you will see the 9 technology and the different ways that people use 10 even some of the fuels we have had before. 11 MR. BERKOWITZ: So it's your premise is 12 that the public education premise is not 13 important? 14 MS. MURPHY: Oh, no. 15 MR. BERKOWITZ: So my question again is, 16 how does the legislature plan on watchdogging the 17 efforts of the public education efforts? 18 MS. MURPHY: One very small example, 19 relative to aggregation in the municipalities. 20 And I must tell you there concerns the consumer 21 education package on every single level, not just 22 one part of it, every single bit is what we're 23 concerned about. And I have placed calls how 24 soon it will be released and what type of 25 information. I believe Rich Bagger was here this 63 1 morning to testify. We're clearly very 2 emotionally involved in the entire issue of 3 deregulation. We wish to see it made a success. 4 Communication issues, when it was broken because 5 they didn't know which was the better choice for 6 a hundred different reasons, they didn't have the 7 education. We are committed to making sure that 8 every part of this education is there, every 9 single part, that includes the environment as 10 well as everything else. 11 MR. BERKOWITZ: Any other questions from 12 the council? 13 MR. MANGANELLI: I'd like to ask the 14 Assemblywoman, there was an article in the Ledger 15 a while back about nuclear power that's still in 16 the plans, what did you people see as you were 17 going through details of this? 18 MS. MURPHY: Probably we all saw different 19 things relative to nuclear power. Again, the 20 facility, the ground on which the facility is 21 created is quite valuable land. It brought 22 generation into areas where we will continue to 23 meet generation and the infrastructure, so they 24 are very valuable places. Nuclear power has had 25 a, certainly, a very controversial life. It does 64 1 not contain an emissions. 45 percent of the 2 state's energy is developed from nuclear power. 3 Do we say to people go without because we don't 4 want to use the nuclear facilities anymore? I 5 think, again, you have to try the marketplace on 6 these. Quite often we are prognosticating before 7 we have definition, a very scary place to be, but 8 a very exciting time. So the balance is always 9 fascinating. Thank you. 10 MR. BERKOWITZ: Thank you very much. Hal 11 Bozarth. 12 MR. BOZARTH: Good morning, Dr. Berkowitz 13 and members of the Clean Air Council. I 14 appreciate the opportunity to do this. If I can 15 figure out how this works, I'd be much better 16 off. I'm here today in a dual capacity, one as 17 the executive director of the New Jersey Chemical 18 Industry Council, comprised of folks that you all 19 probably can guess who they would be. Dr. Zonis 20 could probably guess who they are. And secondly, 21 as the spokesperson for the Coalition of 22 Competitive Energy, which was one of the primary 23 movers and shakers, if you will, in the 24 just-finished deregulation battle that the 25 assembly people talked so eloquently about. And 65 1 Assemblywoman Murphy was an amazing asset for 2 everyone in the process to have. She not only 3 has a dynamic personality, but she see really can 4 crystallize points extraordinarily well. I was 5 very impressed with what she just did. She made 6 a couple of points that all I want to do is 7 underline. And that is the benefits of an open 8 competitive marketplace directly related to what 9 you will and we all are about, and that's clean 10 air and environment. But first, why all of a 11 sudden was there a push to free up monopoly 12 systems that have been in place for almost a 13 hundred years? Here's the answer. My friend in 14 public service loves this chart. The states in 15 red are all states with lower prices for energy 16 than New Jersey. The state in yellow is New 17 Jersey. It has rates on average 50 percent above 18 the national average. That's why we went through 19 deregulation. It was clear that one of the 20 competitive pressure points for business in New 21 Jersey was the high price of energy. And so 22 deregulation had at its core the primary function 23 of lowering the cost of this exorbitantly high 24 energy. But there was another benefit to it in 25 an open competitive marketplace, you have to 66 1 remember, this marketplace had been similar to 2 those in Russia and Eastern Europe, closed for a 3 hundred years. No innovations other than the 4 attempted nuclear, no innovations in billing, no 5 innovations in environment improvement. In fact, 6 if you look at the air inventory for our coal 7 fired plants here in New Jersey, you all in the 8 Clean Air Council would be shocked to find out 9 that they are probably as bad as, if not worse, 10 than our bad friends in the midwest that we cry 11 that that their air will be coming over to New 12 Jersey. So that's something that I think is 13 going to change because of the open competitive 14 marketplace. A couple of facts, 89 percent of 15 the midwest coal fired plants now are capacity 16 full, 89 percent. With the addition of 17 deregulation in New York, Massachusetts, 18 Pennsylvania, New Jersey, Maryland, just Delaware 19 three weeks ago, any additional capacity that's 20 going to be utilized in the midwest coal fire 21 plant is going to be taken up by people in the 22 marketplace now, not New Jersey. And guess 23 where, if that air is dirty, it's going to go? 24 It's going to come this way. So the worst case 25 scenario, from my point of view, is to not get 67 1 any regret of these exorbitantly high rates and 2 still after that air, whatever it is, coming in 3 to New Jersey. To me that's a lose/lose 4 situation. You're stuck with your monopoly 5 supplier's charging you the seventh higher rates 6 in the country and the air is not getting any 7 getting any better. Optimistically, here's what 8 a free market will did. We've already seen 9 independent power producers being encouraged in 10 New Jersey, and we know that their technology is 11 at least 20 to 30 percent times better than the 12 existing technology of the monopoly suppliers 13 here in New Jersey. That means if you all did 14 nothing but encourage the existing independent 15 power producers in New Jersey to expand their 16 operations, we can clean New Jersey's air. 17 Here's another thing that you should know, all 18 sorts or new technologies are coming forward 19 Allied Single has something called a turbo 20 generator. It's about the size of up to about 21 here and maybe six or eight feet in. And because 22 of its new technology, it can supply a 23 supermarket, a hospital, take them right off the 24 grid from all those coal fired plants in the 25 midwest, do it cheaper and do it extraordinarily 68 1 cleaner. That's what Mrs. Murphy was talking 2 about, about what happens with new technology 3 when marketplaces are open, good things begin to 4 happen. And one of the benefits here is the good 5 things are going to happen to the environment, 6 because we'll get away from the old coal fire 7 plants that New Jersey is so fond of calling 8 their own. If you came in on 129 today and you 9 looked left, you saw a stack about 200, 300 feet 10 tall. And if you were unlucky today, you saw the 11 emissions from that stack and it was red, 12 reddish/brown, I come that way every morning, 13 it's a coal fire public service plan. If you 14 compare all the existing instate utility 15 emissions to all the emissions instate to 16 chemical companies, which one do you think is 17 larger? It's not the chemical companies. So if 18 we encourage new technology, and if we encourage 19 the divestiture of these polluting coal fire 20 plants here in New Jersey, we can make an 21 immediate improvement in the air. Dr. Manganelli 22 asked what could the Clean Air Council do in 23 order to help, and I have a couple of specific 24 suggestions, I know my time is running short. 25 Number one, for safety idea of imposing a tax. 69 1 Taxes are regressive ways to change behavior that 2 never really works. If you watched your history 3 anywhere in New Jersey, you'll see, number one, 4 people don't like taxes. Number two, they really 5 don't change behavior. So I don't think that's a 6 solution to the air problem as you all are afraid 7 that exists. Second thing you can do is embrace 8 the open market situation, the utility 9 deregulation, write a letter to Herb Tate in the 10 board of public utilities, and demand that the 11 marketplace that they're now in charge of is open 12 as far as it can possibly be. Demand number two, 13 that utilities be forced to invest their coal 14 fire polluting assets here in the State of New 15 Jersey. And three, demand that the shopping 16 credit, which is in the bill, be allowed to be 17 expanded, which they have the authority to do, so 18 that we all can shop for somebody else's power. 19 The bill calls for, after three years, a ten 20 percent reduction in New Jersey rates. 21 Hallelujah, isn't that wonderful. Remember we're 22 50 percent above the national average. Ten 23 percent is good, but remember what our goal is. 24 If the shopping credit is large enough, we'll be 25 able to buy power from a whole bunch of different 70 1 sources. So the benefit for us, financially, 2 could be significantly more than ten percent, 3 that's really good. Here's the next thing you 4 can do. You can make sure that the Board of 5 Public Utilities does everything in its power to 6 oppose what the legislation gives them authority 7 to do, and that is to put something in place 8 called execute. My friends in the monopoly 9 supplier community during the legislative debate 10 said, oh, we can't have all our customers leave 11 because if we give them a real open marketplace, 12 guess who they wouldn't be buying their energy 13 from and so the utility said to keep them in so 14 we don't lose our customers, we have to have an 15 ability to apply an exit fee, so that anybody 16 that leaves our system has to pay us a charge 17 because after all we built these coal fire 18 polluting plants. So I think the legislation is 19 worded in a way that no exit fees are an 20 immediate threat, I think you should write to the 21 board and say, never ever impose an exit fee. 22 Because if you impose an exit fee, then people 23 won't leave the system, they'll be stuck with 24 their extraordinary high cost, number one. And 25 the air won't get any cleaner, number two. So 71 1 you don't want people stuck in the monopoly. You 2 want people to shop, give them the opportunity to 3 buy from Green Mountain Power, give them the 4 opportunity to buy from an independent power 5 producer who's now in the marketplace. Give them 6 an opportunity to put a 20 million dollar 7 cogeneration facility in their industrial plants 8 so that their rates can go down. All those 9 things will increase the quality of air in New 10 Jersey. And that's the benefit of an open 11 competitive marketplace. We're looking at the 12 world from the old paradigm, only one supplier 13 and you only buy your gas and electric from 14 public service, that is the old paradigm. 15 There's been a fundamental shift, as Mrs. Murphy 16 said. And it's more than just a quick little 17 shift like most legislations, this is cataclysmic 18 in the way the world will look five years from 19 now. You will have the choice of buying your 20 energy from whoever you want. You'll be able to 21 shop on price, environmental cleanliness, as long 22 as we make sure there's truth in advertising. Or 23 you can stay with your monopoly supplier because 24 you like the color of their trucks or whatever 25 your reason might be to pay 50 percent above the 72 1 national average. If you want to do that, that's 2 certainly your right in America. But you ought 3 to embrace the content of an open marketplace and 4 the ability to shop and do the right thing for 5 the environment. Thank you very much. 6 MR. BERKOWITZ: Dr. Manganelli. 7 MR. MANGANELLI: I like your map. 8 MR. BOZARTH: Thank you. We had a lot of 9 success with it in the legislature. 10 MR. MANGANELLI: I see there's a yellow one 11 and a white one, too. 12 MR. BOZARTH: Yes. 13 MR. MANGANELLI: But why does New Jersey 14 have this higher rate for energy than anybody 15 else? 16 MR. BOZARTH: That was a question we 17 continually asked in the legislative process, and 18 the answers were pretty much as follows, the 19 devil made me do it, charge higher prices. We're 20 paying too much for sociatial benefits that are 21 included in our costs, and there's truth to 22 that. And we just can't do it any cheaper. One 23 of the problems of the high price of electricity 24 in New Jersey in the last couple of years has 25 been, quite frankly, that the folks who run the 73 1 nuclear plants can't get them to run on the 2 average fifty percent of the time, so they have 3 to buy replacements power for that. So the cost 4 of operation--you have to remember, in a monopoly 5 situation, it's not like a chemical or a 6 pharmaceutical company, people aren't worried 7 about the marketplace, their customers never 8 leave. So consequently, our prices in New Jersey 9 have soared expeditiously. Given the fact that 10 nuclear plants don't seem to be able to run right 11 all the time, that's another hump, plus we put a 12 lot of taxes and I'll certainly admit to that. 13 But it's clear that our neighboring states have 14 significantly lower rates and they're moving to a 15 deregulated energy economy, so their rates are 16 going to go down. This is an old map, New York 17 is now down below nine cents rather than eleven 18 cents. Pennsylvania and Delaware are now 19 significantly lower. So from an economic stand 20 point, we're losing the battle for competition 21 for jobs because energy is such a large part of 22 the component of most manufacturing jobs. All of 23 you are aware that in order to have a vibrant 24 economy, somebody's got to make something. You 25 have to add value to a product to make wealth. 74 1 You can't just service something that's not 2 there. So in order to keep New Jersey's economy 3 vibrant, I submit you must make sure it's people 4 who make things, want to stay here, rather than 5 go to one of these other 49 places where it's 6 cheaper. Constant tug and pull but, Dr. 7 Manganelli, that's basically the point. The open 8 marketplace never existed for these monopolies so 9 there's never been any push on price. Every rate 10 increase ever requested by any utility in the 11 State of New Jersey for the last hundred years, 12 every single one, has been approved. There has 13 never been a rate increase denied, that I'm aware 14 of. There may have been a reason in 1911 to have 15 a monopoly situation for energy supply, and I'm 16 sure back then Tom Edison and the boys knew what 17 though were doing, but that's a long time ago. 18 It's time to shed this dinosaur. 19 MR. BERKOWITZ: Mr. Bozarth, you said you 20 welcome an open competitive marketplace, and let 21 people select as they may based on fair 22 advertising. What's your view on how it's going 23 to be represented? 24 MR. BOZARTH: Well, one of the things I 25 worry about is that every new supplier in the 75 1 State of New Jersey will say my energy's green. 2 And we've testified to the board and the 3 legislature to make sure that we have a good 4 definition, as Mrs. Murphy eluded to, about what 5 green really is. If you're going to sell on 6 price, fine, if you're going to sell on green, 7 let's all decide what the fair definition of the 8 problems are. About three years ago a fellow 9 came to me from Kentucky, an energy marketer, and 10 said he can supply all 105 member companies in 11 the chemical industry council at that point of 12 time for energy industrial rate at about 2.3 13 cents a kilowatt hour, now nine cents a kilowatt 14 hour in New Jersey. I said, how in the world can 15 you do that? He said, the marketplace is vibrant 16 enough to allow me to get electrons into the 17 manufacturing plants for a hell of a lot. He 18 said something that stuck with me. He said in 19 ten years and probably before, you will go to 20 your Acme and sign up for your energy supplier as 21 you pay your bill for your groceries. I said, 22 that's crazy. He said because energy will become 23 a fungible--what's the word? 24 MR. ZONIS: Commodity. 25 MR. BOZARTH: Commodity, thank you. That 76 1 people will use it. If you promise to buy your 2 groceries at Acme, we'll give you your telephone 3 and electric on the side or whatever the 4 combination will be. Now, think about that, that 5 means all my friends that shop at Acme will be 6 aggregating themselves to get a lower price. Now 7 a lot of people are going to mature in their 8 thought process and they're going to say, price 9 is not the only thing around here, I want to make 10 sure that I'm not paying for more. I want Green 11 Mountain Power because I believe their ads. As 12 long as there's truth in advertising, as long as 13 they've got a good mix of energy producing things 14 to offer to people, I think that's great. That's 15 the open marketplace. Frankly, that's the 16 American way, don't just offer one thing, let 17 people choose. That's what energy deregulation 18 is all about, choice and lower prices. As long 19 as we allow the exit fees to say in place, we're 20 not going to have those things. 21 MR. MANGANELLI: Those industries that you 22 represent, how are they facing this energy issue, 23 are though going into more conservation of 24 energy? 25 MR. BOZARTH: That's a great question. As 77 1 you know, because you know so many of those 2 people, they're watching every dime. They know 3 energy is, in some cases, 15 to 20 percent of 4 their operating cost. So they've looked at ways 5 to conserve. It's not a different kind of light 6 bulb that's going to save the world here. My 7 fear is that they will vote, in effect, with 8 their feet, and go to the places, Louisiana and 9 Texas, and their numbers are certainly smaller 10 and growing smaller, where they can afford to 11 operate more efficiently. What I think though, 12 what you're getting at, what else will they do, 13 they'll go to on site cogeneration, and I'll give 14 you a couple of examples of companies that did 15 it. One is General Motors. General Motors had 16 an old mill built sometime, I want to say the 17 '50's, which was clearly for electric 18 regenerating purposes, similar to a coal fire 19 plant, it was a dinosaur, lot of pollution, high 20 cost, problematic. They moved to--they wanted to 21 move on an on-cite cogeneration facility in order 22 to cogenerate their electricity, both of which 23 they could use at a significantly lower cost at a 24 better hit for the environment, much lower 25 emissions. Public service, I'd hate to pick on 78 1 you, Jim, threatened to bring them to court to 2 say you can't leave our system with your plant in 3 Middlesex County because that would be unfair to 4 us because we would lose you as a customer 5 because you pay a lot of money. General Motors, 6 smart they are, went to the leaders of the State 7 of New Jersey and asked for help hand Mrs. 8 Whitman's administration said there shall be no 9 exit fee for the General Motors plant in Linden 10 because guess what, it was ready to be closed 11 down. General Motors folks looked at all their 12 manufacturing plants as you would hope they would 13 do around the world and found the top two highest 14 when it came to energy costs, one was in New York 15 and the other was in Linden. Well, they just 16 shut down the one in New York, and guess which 17 was now number one on the general Motors list, 18 Linden. Linden had to do something. Since it 19 couldn't shop in the open marketplace, it 20 invested in excess of 20 million dollars in new 21 on-site cogeneration facility, which benefitted 22 everybody except the stockholders of PSE&G, I 23 guess they lost a penny or two. But I didn't see 24 it from stock reports. So that's what people 25 will do, they'll either buy from independent 79 1 power producers that are there already in the 2 state, or they'll buy from out-of-state suppliers 3 which are cheaper, or they'll invest in on-site 4 cogeneration facilities like Princeton University 5 did two years ago. Similar story, couldn't 6 afford the higher rates of energy any more, 7 invested the most money Princeton University ever 8 invested in any capital project and put in an 9 on-site co-facility, their cost for energy went 10 significantly down, their emissions went down, 11 the air was better, tuition stayed a little 12 lower, everybody should have been happy. One guy 13 wasn't, but you know who that is. 14 MR. MANGANELLI: How do you feel that 15 public education on this problem should be 16 carried out? 17 MR. BOZARTH: I think public education 18 should be done similar to what happened in 19 Pennsylvania. Throughout, be constant on air 20 commercials about this, we now have to choose. 21 One of my disappointments was that the utilities 22 are in charge for choice here in New Jersey, and 23 the money it's going to cost, they're going to 24 bill that to us in rates, that's a shame. You 25 win one and you lose one. But the bottom line is 80 1 the more education the better. 2 MR. BERKOWITZ: We're going to have to move 3 on. Mr. Torpey. 4 MR. SIEBENS: Thank you and good morning. 5 My name is not Jim Torpey. I'm traveling as an 6 alias. My name is Chris Siebens. I'm the 7 manager of the regulatory problems. I manage the 8 energy efficiency programs for GPU Energy in New 9 Jersey. Jim Torpey had a death in the family, 10 could not attend. I wanted to start out by 11 congratulating the legislature on a very exciting 12 and effective birthing experience of the 13 legislation. It is, I believe, a good framework 14 for getting a lot of the initiatives and support 15 in place. But as all parents know, the birthing 16 experience is only the beginning. This morning I 17 tried to persuade my son to go to school, despite 18 a sore thought, that it's not always comfortable 19 to make a commitment to progress. But committing 20 to progress is what we have to do everyday. So 21 it was worth going to school. And this 22 restructuring legislation is worth complying 23 with. As the only utility in New Jersey that has 24 divested of generation assets, GPU Energy may 25 contribute unique perspectives on some 81 1 environmental issues. By the end of the year 2 2000, the only energy supplied to our customers 3 from plants we own will be from the Yards Creek 4 pumped storage facility. We will buy virtually 5 all our energy supply from generation sources 6 owned by others. We therefore have a focus on 7 the affordability and generation sources owned by 8 others. We therefore have a focus on the 9 affordability and practicability of environmental 10 initiatives in the larger context of ongoing 11 restructuring activities. The changes are 12 massive, and GPU is committed to implementing 13 them effectively and responsibly. We are 14 extremely optimistic that environmental 15 improvements will be realized with the Act, and 16 with new federal emissions standards that start 17 phasing in this year. Our comments now focus on 18 the questions raised. Will New Jersey's fuel mix 19 change with deregulation? The question requires 20 some speculation on customers' choice of 21 suppliers, but in the near term, irrespective of 22 buying from the sources that are currently 23 available. As new supply sources become 24 available, and federal regulations taking effect 25 this summer cause the economics of existing 82 1 plants to change, there will likely be a gradual 2 shift toward cleaner sources. Will New Jersey's 3 air quality improve with deregulation? New 4 federal regulations start this year and phase in 5 over the next four to five years that will reduce 6 SO2 and NOx emissions nationally upwind of New 7 Jersey and therefore will improve air quality in 8 New Jersey. These regulations happen to be 9 implemented concurrent with deregulation, but 10 will directly impact generation on a national 11 basis. That will have a positive impact on New 12 Jersey's air quality. What is the State doing to 13 provide customers information in selecting an 14 energy supplier? According to the Act, citizens 15 will have information on the fuel mix and 16 emissions of suppliers that will enable them to 17 make informed choices. Later this week, GPU 18 Energy and other parties will comment on draft 19 rules called for in the Act. GPU is generally 20 supportive of energy suppliers' accountability to 21 inform customers of what they are buying. 22 However, to meet that objective effectively, the 23 information provided must be valuable, 24 understandable and credible to the market, and 25 the administrative processes must be practicable 83 1 and economic we must take the time necessary 2 to"do it well". As with any new product, we 3 would strongly recommend test marketing the 4 content and format of any product to be used. 5 How can state government protect against 6 emissions from less clean, out-of-state energy 7 sources? GPU would recommend against imposing 8 new standards on top of the new Federal 9 regulations about to take effect. We do not see 10 it in NJ's interest to discourage or eliminate 11 potential suppliers by imposing additional layers 12 of regulation. Rather, we recommend monitoring 13 the progress of the Federal regulations, and do 14 what makes sense over time based on that informed 15 experience. The last two questions address the 16 important issues of support for new clean energy 17 sources, and energy conservation. Will 18 deregulation provide incentives or disincentives 19 for conservation and renewable power? GPU is 20 committed to the future of competitive markets 21 for distributed energy resources and energy 22 efficiency. With respect to new clean sources, 23 we've been actively looking for ways to introduce 24 new sources of electricity that are less 25 polluting than traditional central station fossil 84 1 fuel electric generating stations. These efforts 2 lead us to conclude that one of the best ways to 3 ensure that deregulation doesn't adversely impact 4 New Jersey's air quality is to make renewable 5 energy available to the marketplace. GPU's 6 competitive efforts in this regard are based in 7 our Technology Ventures group. Technology 8 Ventures is the part of GPU's business dedicated 9 to finding and developing innovative technologies 10 with potential for being major players in the 11 future energy arena. Technology Ventures, whose 12 goal is to make renewable energy an integral part 13 of energy supply, is currently immersed in 14 various projects in the distributed generation 15 field. Two of GPU's Technology Ventures that 16 will make renewable energy available soon in New 17 Jersey's energy marketplace target fuel cells and 18 photovoltaics. The first venture is our equity 19 investment in Ballard Fuel Cells. Back in 1996 20 GPU was the initial investor in Ballard 21 Generation Systems, a company formed by Ballard 22 of Vancouver and GPU. Ballard Generation Systems 23 will develop and market a number of clean fuel 24 cell products for applications ranging from 25 hospitals, manufacturing, and telecommunications, 85 1 to providing New Jersey homes with clean, 2 non-polluting heat and power. Our first 3 250-Kilowatt product will be available in New 4 Jersey sometime next year. Our second venture is 5 through GPU Solar Inc., a joint venture with 6 Astropower a leading manufacturer of solar 7 electric photovoltaic modules. GPU Solar is 8 selling residential packaged photovoltaic systems 9 that provide homes in New Jersey with up to 50% 10 of their annual electricity use. A GPU Solar 11 system installed in Lakewood, New Jersey is 12 providing the home's residents with 48% of their 13 winter electric use with that number likely to 14 rise this summer. GPU Solar is also developing 15 green power plants in California and Pennsylvania 16 and is looking forward to the development of this 17 market in New Jersey. With respect to 18 conservation and efficiency supported in the Act, 19 GPU Energy has provided a leadership role in the 20 State in the implementation of numerous energy 21 efficiency initiatives, and is committed to the 22 Comprehensive Resource Analysis process currently 23 being undertaken by the BPU. We have committed 24 resources to provide input to this process and is 25 making every effort to see that the moneys set 86 1 aside in the Act via the Societal Benefits Charge 2 for renewable energy and energy efficiency 3 measure are spent wisely and effectively. Part 4 of the scope of the CRA process will be to 5 explore market barriers, disincentives, to 6 investments in cost effective energy efficiency 7 and renewable technologies, and target resources 8 where the barriers and opportunities are 9 greatest. In closing, the Act will provide for 10 many other renewable energy business 11 opportunities if left to do what the legislature 12 intended it to do. These opportunities will 13 arise through implementation of this law's 14 nationally significant environmental provisions 15 such as the Renewable Energy set-asides in the 16 Societal Benefits Charge and the Renewable 17 portfolio standards. GPU believes the 18 legislature did a good job protecting New 19 Jersey's air quality and that these business 20 opportunities can only be good for New Jersey's 21 environment. Thank you. 22 MR. BERKOWITZ: Questions? Mr. Zonis. 23 MR. ZONIS: Mr. Siebens, first of all, I 24 think GPU should be commended for participating 25 in the fuel sell operation. You point out 87 1 earlier by the end of next year it's only Yards 2 Creek that will supply, I guess, in-house power. 3 And I would presume from that that you are 4 already purchasing from remote locations some 5 significant amounts of power here in 1999, is 6 that not the case? 7 MR. SIEBENS: That is the case. 8 MR. ZONIS: Are you knowledgable as to what 9 the environmental emissions are for such remote 10 power that you purchased? That is, can you, if 11 you have the date in front of you now, can you 12 tell us that ten percent of your power is coming 13 from coal burning plants in Indiana or Kentucky 14 or someplace, do you pay attention to that now? 15 Because I would assume you would be paying 16 attention to it when the full effects of the new 17 Act are enforced. 18 MR. SIEBENS: Thank you. In my current 19 job, I don't know those numbers off the top of my 20 head. As the regulations unfold, at least for 21 the immediate future, GPU energy will be the 22 supplier of the--the default supplier, and 23 therefore we will have to comply fully with 24 whatever the requirements are. I don't know the 25 detailed, the direct response to that question 88 1 today. I know that we know our energy sources 2 and who we're buying power from. But on a daily 3 basis, I don't know if I can respond to that. 4 MR. ZONIS: It's interesting because here 5 it is the middle of April, and I gather while 6 these regulations are still in draft form, it's 7 going to be the first of August that we all 8 assume they'll be in full force and effect, and 9 that gives you just a handful of months to 10 develop the procedures to where these labels and 11 what not can be provided to the public. It seems 12 to me that GPU or anybody else that proposes to 13 supply power to the consumers in New Jersey 14 should be developing their procedures now so that 15 they know that ten percent of their power comes 16 from Pennsylvania, it's from coal, it has X 17 pounds of SO2 or all the other standards, and 18 we'd be starting to develop that information. I 19 think, as I say that, I'm a little bit 20 disappointed that you can can't tell us now that 21 the purchases that you make are at a certain 22 level and that come next year or 2,000 or 23 whatever, they will be at some other level, 24 hopefully better or not or whatever. But I would 25 like to suggest to GPU or any of the other people 89 1 who propose to be providers in New Jersey that 2 they get cracking on this and start to make this 3 information available. 4 MR. SIEBENS: Let me make sure that you 5 understand that I personally am not directly 6 linked to that process, and therefore I don't 7 know. I would be happy to respond to provide you 8 that information and information about our 9 capability. 10 MR. ZONIS: That's fine. I would 11 appreciate that, and I would thank you if you 12 would take an effort to do just that. 13 MR. SIEBENS: That would be fine. 14 MR. ZONIS: Thank you. 15 MR. PALMER: I like the efforts you're 16 making on solar and fuel sell. The annual R&D 17 budget that you have for pursuing solar and fuel 18 sell technology, if you have any idea of what the 19 number is for the all of the companies in the 20 region. 21 MR. SIEBENS: I do not know the answer to 22 that question. I'll see if I can find what it 23 is. Internally, I don't know that we can provide 24 it for the region. 25 MR. PALMER: I would say the only way we're 90 1 going to get someplace with solar and fuel sell 2 is if we're spending enough money on R&D to 3 really accomplish it. 4 MR. SIEBENS: It's an interesting point. 5 R&D is one aspect of technologies development. 6 Developing a delivery infrastructure that's 7 reliable and that may support a market for the 8 technology is equally or even more important. 9 Photovoltaic technologies on a technical level 10 are really pretty much available, they're just 11 expensive. And plus, there's no infrastructure 12 to deliver, and more importantly, maintain them 13 and respond to the market. That may have 14 difficulty installing these things properly. 15 MR. MANGANELLI: Here's something I think 16 you would know something about. We're talking 17 about energy efficiency, years ago we had a 18 public hearing, we were talking about coal at the 19 time, one of our greatest resources in this 20 country. Has progress been made on this so we 21 can still use this sizable amount of natural 22 energy sources? Have you been doing that? 23 MR. SIEBENS: Again, that's not in my 24 personal bag of tricks. I work with customers 25 and their energy efficiency, whether they have 91 1 opportunities, lighting, motors, air 2 conditioning, that kind of thing. With coal gas 3 and those other projects, we are, as a company, 4 contracted to them and aware of them, less so 5 today because we're diversing in our generation 6 focus, but, again, I'd be happy-- 7 MR. MANGANELLI: Send us information. 8 Also, I read where you sold unit within the Three 9 Mile Islands, right? 10 MR. SIEBENS: Yes. 11 MR. MANGANELLI: Another outfit bought them 12 and feel that they can do the job and yet you 13 people considered you couldn't do the job of 14 this. 15 MR. SIEBENS: It's not a question of 16 whether we can do the job, it's whether the 17 focus--the question is if we're getting out of 18 generation, is that a declaration of defeat on 19 the generation side, and no. It's a business 20 decision to have a focus on infrastructure. On 21 the business, transmission, distribution 22 business, possibly gas companies, local 23 distribution, not on the competitive energy 24 supply that other companies have focused on. 25 MR. SPATOLA: I have a very quick question 92 1 I want to ask you. You're saying you're going to 2 be changing in the not so distant future. Are 3 you at least aware at this point whether you'd be 4 acquiring pooled power or from sources where it's 5 originally generated in the future so you'll know 6 the point of generation of the electricity that 7 you'll be marketing? 8 MR. SIEBENS: The question is, will we know 9 exactly what the source of our energy is. We'll 10 be paying off of PJM as one of our sources from 11 other brokers according to what's available in 12 the competitive market. You don't necessarily 13 have the paper and the accounting to know exactly 14 how. 15 MR. BERKOWITZ: Thank you. We're going to 16 have to move on. Is Mark Brownstein here? 17 MR. BROWNSTEIN: Yes. On behalf of the 18 Public Service Electric and Gas Company, I'm 19 pleased to provide testimony for the New Jersey 20 Clean Air Council and the impact of the electric 21 industry restructuring on the environment as you 22 may recall last year's Council meeting was 23 focused on maintaining the federal health 24 standard for ozone here in New Jersey. At that 25 time, I testified on the relationship between 93 1 coal fired power plants located in the south and 2 the midwest and New Jersey's ongoing air quality 3 problems. From that testimony, you may recall a 4 few important facts. First, ozone measurements 5 taken by research aircraft flying along New 6 Jersey's western border show that during a number 7 of summertime ozone episodes, air entering New 8 Jersey already exceeds the federal health 9 standards for ozone. Second, over 40 percent of 10 the total ozone affecting New Jersey's air 11 quality comes from out of state sources. Much of 12 this transported ozone is the result of nitrogen 13 oxide emissions from power plants located in the 14 south and midwest that, coincidently, operate 15 with tall stacks and little or no environmental 16 control. Third, unregulated power plants in the 17 south and midwest enjoy a competitive advantage 18 over plants in New Jersey, which have advanced 19 pollution control technology and higher operating 20 costs as a result. Over the past ten years, 21 PSE&G has spent over one billion dollars, that's 22 with a "B", to dramatically lower emissions of 23 NOx, sulfur dioxide particulate matter, carbon 24 dioxide and other air pollutants. We've achieved 25 these reductions through a combination of 94 1 installing advanced emission controlled 2 technologies on our existing generation with 3 powering a significant portion of our generating 4 capacity with state of the art combined cycle 5 natural gas technology. And also, modifying our 6 fuel profile by switching to and co-firing with 7 gas. These steps were taken as a result of 8 voluntary initiatives that the company undertook, 9 and also the result of New Jersey's stringent 10 environmental regulations. You may also recall 11 from last year's hearing that PSE&G urged the 12 council members to take two actions to address 13 the problem of pollution transport. First, we 14 asked you to express support for a federal 15 proposal to regular power plant NOx emissions 16 across the eastern United States. And second, we 17 asked to you support in corporation of specific 18 environmental protection provisions into federal 19 and state electric industry restructuring 20 legislation. Well, whatever you guys did in the 21 intervening year, you did a marvelous job because 22 today I'm here to say that substantial progress 23 has been made on both of these issues. First, 24 this passed September, the US Environmental 25 Protection Agency adopted a proposal to 95 1 significantly reduce and cap NOx emission across 2 22 eastern states by May of 2,003. This is the 3 first time that the federal government has taken 4 decisive action to address the issue of pollution 5 transport. Equally important, this action, which 6 is premised on establishing a uniform .15 pound 7 per million BTU for NOx emission rate for all 8 power plants in the 22 states. It demonstrates 9 that EPA now understands the relationship between 10 electric restructuring and air quality. PSE&G 11 believes that EPA's decision to take action to 12 reduce power plant NOx emission is a harbinger 13 for future federal action on other issues of 14 concern, such as mercury emissions from coal 15 fired power plants and power plant 16 contributions. Second, the restructuring 17 legislation signed by Governor Whitman this 18 passed January contains a package of 19 environmental provisions which placed New Jersey 20 in the forefront of states seeking to harmonize 21 energy and environmental policy. On this point, 22 we're heard a number of speakers elaborate on the 23 initiatives, but let me just underscore them. 24 First, mandatory environmental disclosure for any 25 one selling power in New Jersey. When consumers 96 1 begin to make choices this August, they will have 2 the information necessary to choose an energy 3 supplier based upon environmental performance. 4 By the way, it's not just information for those 5 companies who choose to market their product, but 6 it's for all suppliers. An important consumer 7 information. And in addition, consumers will 8 have the ability to distinguish between competing 9 plants made by different green power suppliers. 10 Added to that are protections to make sure that 11 when a consumer pays a premium price for a green 12 product that they will actually get what they 13 paid for. This is unique in the United States. 14 We have, probably the finest environmental 15 disclosure program anywhere in the US right now. 16 Second important piece of the bill is 17 preservation of New Jersey's strong commitment to 18 existing energy conservation. New Jersey, 19 historically, as it was mentioned earlier, has 20 been of the most aggressive and successful energy 21 conservation programs in the United States. The 22 good news here is that in addition to preserving 23 that commitment that there will be approximately 24 an additional 120 million dollars annually each 25 year over the next four years to finance new 97 1 energy efficiently programs here in the state of 2 New Jersey. And as older programs begin to phase 3 out, some of that money, in turn, will be devoted 4 to new programs as well. This is also unique 5 among state restructuring bills. A third 6 important provision is that there are a suite of 7 provisions in the bill to encourage the 8 development of new energy resources in New 9 Jersey. Including net metering provision, a 10 renewable portfolio standard for all power 11 suppliers in New Jersey, and the guaranteed 12 source of funding. And finally, it was mentioned 13 earlier as well, the Board of Public Utilities 14 has the authority, in consultation with the DEP, 15 to set an environmental performance standard when 16 and if they reach the conclusion that regional 17 and federal efforts to regulate power plant 18 emissions aren't working. These provisions are 19 great, and they're all the more impressive when 20 compared with the restructuring programs of our 21 nearest neighbors. Pennsylvania, for example, 22 lacks a disclosure requirement because there's no 23 portfolio requirement, it offers no funding for 24 renewable resources, and requires no funding for 25 energy efficiency programs beyond the relatively 98 1 small amount that Pennsylvania utility companies 2 currently spends. In New York, New York requires 3 no renewable portfolio standard and requires only 4 a small amount to be collected each year for 5 energy efficiency programs. And although I have 6 not seen the actual bill yet, my understanding is 7 that in Maryland, there's no financial support 8 for renewables or energy efficiently. On the 9 whole, therefore, PSE&G supports the 10 environmental provisions contained in New 11 Jersey's construction legislation. And we think 12 that the Clean Air Council should be very 13 pleased. From this point forward, PSE&G's 14 efforts will be directed toward making sure that 15 these provisions are implemented in a fair, 16 effective and timely manner. We plan to work 17 closely with the Board of Public Utilities, the 18 New Jersey Department of environmental Protection 19 and other stakeholders to make the various 20 environmental initiatives in the legislation a 21 success. I would be remiss, however, if I did 22 not call your attention to one important piece of 23 unfinished business related to restructuring of 24 New Jersey's environment. EPA's 22-state plan to 25 regulate power plant NOx emissions is under heavy 99 1 political attack. Several midwestern states 2 joined by their utilities have sued in federal 3 court to block the plan. Several of these states 4 have publicly declared that they will not adopt 5 the necessary regulations to implement the 6 program. And Midwestern utility companies are 7 right now walking the halls of Capital Hill 8 convincing members of congress to intervene on 9 their behalf by raising false claims about the 10 effect of implementing environmental controls on 11 the reliability of electric supply. These are 12 false claims, but they're being used as a scare 13 tactic. If you are an advocate of regional and 14 federal solutions to power plant emission 15 problems, these are, in fact, those times. 16 Fortunately, there is something that can be 17 done. Section 126 of the Federal Clean Air Act 18 empowers the state to petition EPA directly when 19 it can show that power plants or other large 20 stationary sources of NOx are contributing to 21 that state's air quality problem. If the 22 petition is granted, EPA has authority to take 23 direct action against the source that is causing 24 the problem. This is a powerful remedy with a 25 correspondingly high burden of proof. To date, 100 1 New Jersey has chosen not to exercise this 2 option, preferring instead to work directly with 3 those states having the greatest impact on our 4 air quality, while at the same time marshaling 5 the facts necessary to sustain such a decision 6 should it become necessary. Should New Jersey 7 conclude that it is now the appropriate time to 8 exercise its rights to Section 126, PSE&G 9 believes that the Clean Air Council should be 10 prepared to support that decision. Governor 11 Whitman has consistently and successfully argued 12 for clean air in many forms and sometimes intense 13 debates within the National Governor's 14 Association. Commissioner Shinn has invested 15 large amounts of his personal time and personal 16 credibility to establish the science and policy 17 recommendations that made EPA's 22 state NOx 18 reduction plan possible. Without the 19 Commissioner's involvement and the Governor's 20 active involvement, none of this ever would have 21 happened. They have served New Jersey's 22 interests very well. And they deserve the 23 Council's support, should New Jersey choose to 24 take the next step and file Section 126 25 petition. I would urge the Council, on the 101 1 record, in supporting such a decision. Thank you 2 for providing me the time to speak with you this 3 morning. I'd be happy to answer any and all 4 questions. 5 MR. MAXWELL: Back in the fall, the Clean 6 Air Council did memorialize the Commissioner's 7 support. I don't know if you were aware of 8 that. An earlier speaker urged that consumers of 9 the state write to the BPU and demand that the 10 coal generators in New Jersey be closed. The 11 question is, what has your modeling shown, if, in 12 fact, the New Jersey coal generators were shut 13 down? Because they have been under attack here 14 from the environmental groups and so on. What 15 would be the impact on New Jersey air as a result 16 of their being boarded up and that power being 17 produced from out of state? 18 MR. BROWNSTEIN: Let me take a step back. 19 First of all, people at PSE&G had a leadership 20 role in the industry in arguing that the power 21 plants should be cleaned up as part of 22 deregulation. We've made that argument here in 23 New Jersey, we've made it on a regional basis and 24 we've made it on a national basis. People within 25 our own industry perceive that to be that PSE&G 102 1 has declared a war on coal, that somehow PSE&G is 2 against the use of coal, that our goal in life is 3 to shut down all the coal fired power plants in 4 the midwest. That's not our agenda. As was 5 pointed out to you earlier, we do want coal 6 plants both here in New Jersey and in 7 Pennsylvania. I think the difference between 8 PSE&G and a lot of other companies, that perhaps 9 you've heard from today and that you might hear 10 from over the next several days, is that we've 11 made a very strong commitment to clean the plant 12 up, to improve the environmental performance. 13 We're the only company in the United States to 14 make a voluntary commitment to reduce our NOx 15 emissions by the year 2,000, and we expect to 16 make that commitment this year. Our perspective 17 is that you can burn coal, but you have to burn 18 it cleaner, and we're making the investment in 19 our plants to do that. That being said, we 20 believe that if you were to shut down coal plants 21 here in New Jersey, that all you would really 22 succeed in doing is importing more power from 23 plants in the midwest, where those investments 24 have not been made and where those companies are 25 active in opposing federal and regional efforts 103 1 to require those types of reductions. So I have 2 a very hard time believing that that's a 3 preferred option. And, in fact, this argument 4 has been bouncing around the New Jersey 5 restructuring debate for close to the three years 6 that there has been a debate in New Jersey. I 7 think the legislature considered it, rejected it 8 and those who continued to call for it are on the 9 extreme of the debate in advocating that. 10 MR. SPATOLA: Just a quick question 11 regarding the innerstate transport that brought 12 up at the initial part of your testimony. You 13 talked about, I think, a 50 percent number of the 14 ozone coming in from out-of-state sources. Does 15 your information go further than that to identify 16 whether that's attributable to mobile sources so 17 if one were to look at some kind of action by an 18 agency such as EPA, that the action would be 19 focused on the right source of the generation of 20 the problem that's created? 21 MR. BROWNSTEIN: That's a very good 22 question. And that was obviously a question that 23 was looked at quite extensively during the OTAG 24 process, which is the source of the data that I 25 just presented to you. There was a lot of 104 1 questions being asked about whether the NOx and 2 the ozone that was being transported into the 3 northeast, what was that really from, and I think 4 what the modeling showed is that it was, in fact, 5 the large stationary sources, primarily power 6 plants, which made up the bulk of that 7 contribution. Throughout the '60s and '70s, the 8 idea of improving air quality in Ohio and else 9 where in the midwest was simply to build the 10 stacks taller. So as a consequence, the 11 pollution goes higher-up in the atmosphere and as 12 you might expect it therefore carries longer 13 distances, one of the reasons why in many areas 14 of the midwest air quality meets the federal 15 health standards, yet, 80 percent of the total 16 NOx being emitted from power plants in the United 17 States is coming essentially from the eastern US, 18 tall stacks, lots of dispersion, it comes down 19 somewhere, it comes down on us. So that was 20 looked at the modeling and, in fact, that was the 21 basis for OTAG's conclusion that utilities NOx 22 reductions of up to 80 percent were necessary to 23 address the ozone transport problem in the 24 eastern US. 25 MR. BERKOWITZ: One last question. 105 1 MR. PALMER: Presumably, there's going to 2 be some grading of power sources so customers can 3 decide how green they want their power and so 4 forth. Would it be at all possible to tie some 5 bonus points on this rating system to a 6 supplier's willingness to spend money to cleanup 7 plants or to close down dirty facilities? 8 MR. BROWNSTEIN: First and foremost, the 9 strongest points are going to come from the 10 consumers. One of the reasons why PSE&G was a 11 strong advocate in the bill was because we felt 12 that when consumers had the environmental 13 information at their fingertips, that it would 14 empower them to make choices based on the 15 environmental performance of the suppliers. For 16 those who want to purchase a purely green 17 product, the information is available and they 18 can do that. But for those consumers who are 19 weighing competing offers from producers who 20 perhaps made no particular environmental claim, 21 they will have the information at their 22 fingertips to say all other things being equal, I 23 see two or three other offers here that may be 24 about the same price, but you know what, this 25 one's cleaner and I'm going to purchase this 106 1 one. And in turn, our feeling is that as 2 consumers exercise that type of choice that there 3 will be a ripple effect in the marketplace. The 4 demand will be there, marketers will go out and 5 look for the cleanest sources of power, and in 6 turn, that will cause demand for increased 7 generation of cleaner sources. One of the 8 things, going back to John's question, PSE&G has 9 a diverse mix of fuel sources we have coal fired 10 power plants in New Jersey, we have state of art 11 and natural gas power plants. The natural gas 12 plants don't run much. They're state of the art, 13 they are some of the cleanest plants in the 14 United States, they don't run much in a 15 competitive wholesale environment. Why is that? 16 Gas is twice as expensive as coal. You want to 17 know why rates are so cheap in Kentucky, they're 18 sitting on top of huge coal fields with no 19 environmental regulations governing what goes up 20 the stack. That's why prices are cheaper out 21 there, they'll always be cheaper out there. All 22 we're asking for is when you do bring that power 23 to market, at the very least, it meet the same 24 environmental standards that we would expect of 25 any power plant located here, in New Jersey. 107 1 Maybe then, the natural gas plant can compete in 2 a free market will have a chance to run a little 3 more often. 4 MR. PALMER: Right. The customer is going 5 to be looking at what has already been 6 accomplished as far as cleaning up. What I was 7 asking about, what about an additional incentive 8 for companies that are demonstrably going to 9 invest in something that's going to, in other 10 words, kind of up front the credit for it based 11 on investments that are being made before they 12 actually achieve the improvement? 13 MR. BROWNSTEIN: Again, our feeling is that 14 the best and most effective type of incentive 15 that we're going to see is going to be a market 16 driven one. There is going to be a demand. The 17 fact that Green Mountain Energy is out there so 18 aggressively right now. In fact, there's a 19 website where you can find 15 or 20 companies 20 selling green products throughout United States. 21 PSE&G Energy Technologies, when our market is 22 opened in August, hopes to be one of them. But 23 you will find that as a result of that, there is 24 demand for cleaner sources of power and that 25 these companies who are offering those resources 108 1 are finding commercial advantage in highlighting 2 their environmental performance and that in turn 3 is translating back to demand for cleaner sources 4 in the market. I think also the fact that New 5 Jersey has implemented a renewable portfolio 6 standard is going to be very important. And I 7 would expect companies who are complying with 8 that standard to be actively marketing the fact 9 that they offer renewable power for sale. I 10 think the public, generally, would like to see 11 that. 12 MR. BERKOWITZ: We're going to have to move 13 on. 14 MR. MANGANELLI: May I ask him a question, 15 because I'd like to know from Mr. Brownstein, 16 because according to what's happening and the 17 price is going to be reduced to five percent and 18 then ten percent over the next three years, how 19 far can you really reduce the cost? 20 MR. BROWNSTEIN: Well, if you take a look, 21 if you begin to add up all the various cost 22 savings that are in the restructuring 23 legislation, you'll find that for PSE&G, the 24 reduction is about 20 percent. That's with the 25 ten percent rate reduction, it's guaranteed. 109 1 That's with the shopping credit that consumers 2 can exercise. That's with the tax reform package 3 that was talked about earlier. About 20 percent 4 rate reduction. And on top of it, you get the 5 environmental disclosure provisions, which are 6 state of art leading the country. One of the 7 most aggressive commitments to energy efficiency 8 anywhere in the United States. Renewable 9 portfolio standards which guarantee that New 10 Jersey will see the development of renewable 11 resources here in New Jersey. It's a compromise, 12 there's no doubt about it. You will always find 13 people on the extremes of the debate, and how 14 it's often entertaining but often times extreme. 15 You will find people at the extremes of debate 16 who will always say, you could have done better 17 on this point, you could have done better on that 18 point, granted. But as a package, the rate 19 reductions, the environmental provisions, the 20 consumer options that are available to people 21 here in New Jersey, it's second to none. And I 22 think that the legislature should be commended 23 and I think Governor Whitman should be 24 commended. 25 MR. BERKOWITZ: I'm going to stop you 110 1 there. 2 MR. KILLKENNY: My name is Brian 3 KillKenny. I'm with Green Mountain Energy 4 Resources, and they're a power supply group. I'm 5 actually filling in for a couple of our New 6 Jersey point people that could not make it today, 7 but I'm happy to be here and certainly on behalf 8 of Green Mountain, I'm happy to be speaking 9 today. There's been a couple of references to 10 our company. I just want to take a quick 30 11 seconds just to give a brief description of Green 12 Mountain. We're a retailer of green renewable 13 energy in California, in Pennsylvania right now, 14 serving the deregulated markets. We formed in 15 1997. Right now, we probably have about 70 16 employees based out of Vermont. We out source 17 quite a bit of folks, probably over 300 folks in 18 all centers all over the country, as well as 19 functions to supply services, market tipping, so 20 forth. We're funded by a private capital. We 21 originally had a link with Green Mountain Power. 22 That has since been divested and we're 23 exclusively a hundred percent privately owned 24 with utility affiliation at this point. How we 25 started was we were looking at the New England 111 1 pilot program, we really saw a definitive market 2 or cleaner energy, and the results of our efforts 3 there proved to be quite promising, and we look 4 at going forward in states that are truly 5 deregulated, and see if we can make a gaol of 6 it. And all our marketing studies show that 7 there's a market, but potentially a market for 8 providing green energy. And we really saw -- the 9 whole premise behind our business is addressing 10 the problem of utility air pollution. 11 Electricity generation is the largest source of 12 air pollution in the country. 36 percent VOC's, 13 29 percent NOx, 66 percent SO2. All those 14 figures you probably heard before. I'm really 15 looking back at the regulated utilities 16 business. I think conventionally structured that 17 most of the decisions to build power plants were 18 based really solely on economics with a minimum 19 regard for the environment. 20 So our premise really is to allow the customer a 21 choice in selecting their electric service 22 provider. And we feel that in these deregulated 23 markets, these customers, a certain number of 24 customers will want that choice, and will, in 25 many cases, pay the premium that's needed to 112 1 deliver resources, such as solar and wind. 2 So the problem is air pollution. The opportunity 3 in the market is the energy business. If you 4 look at just the residential electric side of it, 5 that amounts to about 55 billion. Certainly, 6 even if we ask another green power provider just 7 captured a small percentage of that, over a 8 certain percentage of states that actually go 9 through deregulation, It's still a pretty 10 significant market there. Certainly, looking at 11 marketing studies of people's appetite for paying 12 more, widely vary in studies, but the range that 13 we felt pretty comfortable with is 47 percent of 14 the people expressed a willingness to pay more 15 for their electricity from renewable energy. 16 We did our own marketing studies and 17 substantiated those numbers. So as I mentioned, 18 we're doing business in California and 19 Pennsylvania. California marketers, 20 approximately seven green power competitors in 21 that state. Many of them are affiliated with 22 utilities, some are not. They all have varying 23 degrees of renewable energy contents in their 24 mix. Some just serve commercial and industrial, 25 many are green leaf certified products. 113 1 In the Pennsylvania market, there's probably 2 about six suppliers that have some type of green 3 bed to them. Of those, probably three are really 4 truly market renewable energy and have green leaf 5 certification. 6 In California -- just a couple of minutes to 7 describe some of the activities that are going on 8 in those two states. California started in April 9 of 1998, just about a year now. They opened that 10 market, such that 90 percent of customers were 11 eligible to switch. So nearly the entire state 12 could switch. 13 As it stands now, about 120 thousand some-odd 14 customers have switched, which represents about 15 1.2 percent of the state total. Much lower 16 switching activity than was anticipated, I'll get 17 to that in a minute. Of those 122 switchers, or 18 120 thousand switchers, it's estimated that over 19 half chose the green energy service provider. 20 In Pennsylvania, which started in January of this 21 year, that was structured such that about 22 two-thirds of the customers were eligible to 23 switch, and that expand is going forward, 400 24 thousand customers to 500 thousand -- the numbers 25 are dependent on who you talk to, when you ask 114 1 them -- 400 to 500 thousand customers have 2 switched to date, and that represents roughly ten 3 to fifteen percent of the customers in the 4 state. 5 Of those switchers, again, market is early, so 6 the numbers aren't really definitive, but numbers 7 between 20 to 30 percent of those customers who 8 have switched have gone to a green energy service 9 provider. 10 The reason for the somewhat disparity between the 11 two states and the activity there, in California, 12 competitive market is based on competing on the 13 wholesale level, so retailers have to go in and 14 basically provide or offer a price that's 15 competing against a wholesale market. 16 Pennsylvania, most people are familiar with the 17 shopping credit issues, where they've embedded 18 the true cost of retail service, such that it's 19 much more of a competitive playing field, and 20 when a customer switches from their utility. And 21 we're certainly seeing the difference in those 22 two approaches. 23 California being of one extreme, Pennsylvania 24 being the other. We've seen a lot of activity in 25 Pennsylvania so far. 115 1 A couple of quick notes on some of the challenges 2 that we've been facing, certainly other 3 competitors. First one is the issue about 4 consumer education. Consumers generally don't 5 know and don't care where their power is coming 6 from. When you do a survey across the country, 7 most people feel that 50 percent of their power 8 is coming from hydro. You have a problem there. 9 So certainly consumer education would be a pretty 10 daunting task for anyone that's entering the 11 market. 12 Electric energy, electrons are not even a 13 tangible commodity. It's hard for people to grab 14 onto it. Likewise, it's hard for people to 15 understand that they're supporting the power 16 plant, which gets mixed into the power pool. 17 That's the way the market works. It's a 18 difficult item to get across to folks. And in 19 that perspective, it really hits home, as far as 20 getting disclosure down. Disclosure is probably 21 one of the key items for the market to continue 22 forward. Without that, really, consumer 23 confidence would really be lost and the whole 24 market would basically flop. So certainly 25 disclosure is a key factor, whether it's 116 1 specifically fuel source, environmental 2 standards, certainly should be implemented to the 3 full extent possible. Certainly other challenges 4 are adversity to deregulation from consumers and 5 other advocates, variation in regulatory rules, 6 utility rules from state to state, as green power 7 providers expand into other states. Limitations 8 in renewable resources in the state in 9 surrounding areas. Certainly California is known 10 to have substantial renewable energy, wind, solar 11 resource, hydro. PJM area is a little more 12 limited. There's certainly no wind to speak of, 13 so hydro is limited. 14 So that will effect price, and it certainly 15 presents a challenge to folks entering those 16 markets. And another quite daunting challenge is 17 people's view point of what is truly green, what 18 is not. We have the Green Organization. We have 19 state definitions. Many environmental groups 20 have varying opinions. Nothing's perfect. Wind 21 has its problems, solar has its problems, hydro, 22 biomass, they all have problems. It's difficult 23 converting a really true consensus on what truly 24 is preferable in the green market. 25 It's worth taking a minute or so to mention that 117 1 the Green Organization, in their effort in 2 certifying independently, the green power 3 business. They've really been instrumental in 4 providing consumer confidence in these markets, 5 and, likewise, it will be instrumental going 6 forward in its success. 7 Furthermore, they've attempted to make 8 definitions available on what is renewable energy 9 and certify products that contain certain amounts 10 of renewal energy. Likewise, they've been 11 advocates and been pushing new content of 12 renewable energy, particularly since developing 13 new facilities is really where you get the 14 biggest bang for your buck in the green power 15 market. 16 That's ultimately what we'll be displacing the 17 older and dirtier plants-- 18 MR. BERKOWITZ: Three minutes please. 19 MR. KILLKENNY: And that's what it can be 20 measured on, as far as emission states. 21 Furthermore, green has been instrumental in 22 promoting annual disclosure and independent 23 auditing among the green power providers. And 24 certainly in California it's going on right now, 25 because it's been a year in that market and all 118 1 the green power provider groups will be 2 disclosing publicly, as well as going through 3 their own processes. 4 So in conclusion, what it really boils down to is 5 certainly we have stakeholders that want to see 6 our business survive from a return perspective, 7 and it's nice to build a business such that you 8 can expand into other areas such as gas and other 9 environmentally conscience products. 10 Where we are coming from here is those things are 11 great, and we're going to focus on those, but the 12 key is what we've done to the environment in 13 quantifying emission reductions and quantifying 14 how many renewable resources we've put on line 15 and the amount of solar and wind and other types 16 of premium products that have been able to bring 17 to the market. 18 Thanks for your time. 19 MR. PALMER: Do you have any projection as 20 to what kind of rate of growth that you can 21 achieve as far as supplying power to the PJM 22 grid? 23 MR. KILLKENNY: I have those numbers, but 24 unfortunately I don't think I can give those out 25 for obvious reasons. We're quite happy. Between 119 1 the two states, we have over 110 thousand 2 customers now, with the majority of those 3 customers being in Pennsylvania, particularly 4 because of those issues I described with the 5 shopping credit, the attractive competitive 6 market. 7 In going forward, again, as long as each state 8 allows some type of shopping credit mechanism or 9 recognizes the true cost of retail service, such 10 that it will stir and enhance competition, 11 whether it's a green power provider or not, 12 indications show that those states will see a lot 13 of activity. And it would be similar, I imagine, 14 to Pennsylvania . 15 MR. PALMER: You will be able to provide 16 more power? 17 MR. KILLKENNY: Yeah. The way things are 18 growing in our projections and how much renewable 19 energy resources are available in Pennsylvania 20 and the surrounding region, and if we enter New 21 Jersey and Maryland, when those states open up, 22 there will probably, likely, be a time when you 23 really tap out your existing capacity. But 24 that's kind of what we're doing. What we're 25 pushing for it to create that demand, such that 120 1 once you tap out your existing resources, 2 developers know there's a need for it, and 3 they'll go out and find ways to bring on more 4 competitive prices. 5 MR. SPATOLA: If you were to provide clean, 6 green power to New Jersey, would you do it by way 7 of PJM, or would you have some method of 8 providing it to the state? 9 MR. KILLKENNY: I would say we would 10 probably use a hybrid, a combination of those two 11 processes. There's certainly some competition, 12 kind of conventional utility owned rate based 13 kind of facilities that we'd be able to purchase 14 from and provide for your customer. Likewise, 15 they would want some smaller facilities, IPP 16 facilities, new gas development projects, new 17 wind projects that we'll bring on line. That 18 would be one more of a one on one type of 19 relationship between the developer and Green 20 Mountain. 21 Thank you very much. 22 MR. BERKOWITZ: Thank you very much. We 23 had a couple of openings occur in the afternoon, 24 which allows us to have a more flexible schedule 25 in the afternoon. If you prefer to be the first 121 1 speaker after lunch, that's fine. You can go now 2 if you want. 3 MS. BISHOP: I'd like to go now. Good 4 afternoon. My name is Cherae Bishop. I'm vice 5 president of legislative affairs and media with 6 IWSA. Our member companies include such 7 companies by the name of Adugen, American Refue, 8 Western Hospital Corporate. Together our members 9 represent 64 waste to energy facilities nation 10 wide. IWSA facilities process approximately 85 11 thousand tons of waste each day and generate 12 about 22 hundred megawatts of clean, renewable 13 electricity, or enough energy to meet the 14 electricity means of two million households. The 15 waste industry offers two important benefits to 16 customers. Safe solid waste management and 17 disposal, as well as the generation of clean 18 electric power. More than 31 million people rely 19 upon our facilities to cleanly and safely dispose 20 of the trash in their communities. Five waste to 21 energy facilities are here in the State of New 22 Jersey. They dispose of 63 hundred tons of trash 23 and generate a 175 megawatts of electricity. 24 Waste to energy facilities process nearly 32 25 million tons of trash each year, and generate 122 1 enough power to meet the needs of 24 million 2 homes. More than 39 people and 31 states rely on 3 the 103 waste to energy plants nation wide. 4 Today's hearing is about the impact of the 5 electric utility deregulation on New Jersey's 6 environment. I would like to address one 7 relatively small, but nonetheless, very important 8 issue involved with deregulation. I'd like to 9 update the Clean Air Council on the significant 10 strives the waste industry has made in keeping 11 the environment clean and safe. New Jersey is 12 similar to numerous states in recognizing waste 13 to energy as an important source of renewable 14 electricity. Our industry generates about 2800 15 megawatts nationally or about one-fifth of 16 America's total biomass regulation. Biomass 17 accounts for about 1.4 percent of total 18 electricity generated. Renewable energy total is 19 slightly more than two percent of the nation's 20 electricity market. New cleaning air act 21 standards now being implemented and shared that 22 waste to energy facilities are among the cleanest 23 sources of electricity in the nation. For 24 example, EPA estimates that mercury emissions 25 from waste to energy plants will dramatically 123 1 decline by more than 90 percent over 1995 2 levels. New Jersey led the way in controlling 3 mercury emissions, and we salute your efforts. 4 Source reduction and the operation of our 5 facilities at the optimal levels have met waste 6 to energy will account for about one percent, one 7 percent of the US inventory of mercury emissions 8 stemming from the industry. EPA has acknowledged 9 similar success in controlling dioxide emissions 10 and had them reduced by at least 99 percent. 11 Waste to energy will represent less than one 12 percent of the known sources of dioxin. Waste to 13 energy prevents the release of more than four 14 million tons of methane onto our atmosphere 15 assuming the same amount of trash now processed 16 at waste to energy facilities is exposed to a 17 landfill without recovery. Waste to energy 18 prevents the release of more than 15 million tons 19 of carbon dioxide into our atmosphere, assuming 20 the same amount of trash. Waste to energy power 21 as an alternative to coal prevents the release of 22 nearly 25,000 tons of nitrogen oxides and 5,000 23 tons of organic compounds. Waste to energy also 24 completes less the earth's natural resources than 25 oil, coal or natural gas, power to electricity 124 1 generation. No doubt, waste to energy is a very 2 valuable human resource. The fuel used in waste 3 to energy plants produce cleaner electricity 4 municipal solid waste. Two basic criteria for 5 establishing one as a renewable energy source, 6 the society will continue to generate waste, and 7 no one can reasonably claim that waste will ever 8 be one hundred percent eliminated. Tomorrow 9 afternoon, in fact, the White House will unveil 10 its proposal to reform the electricity utility 11 industry. The State of New Jersey has at least 12 two very important provisions in common with the 13 federal proposal. One, both New Jersey's law and 14 administration's proposal include waste to energy 15 as a renewable source of power. Two, both New 16 Jersey law and the administration portfolio 17 standards that mandates that renewable power to 18 keep a foothold on a portion of the electricity 19 in the marketplace. We salute both efforts and 20 offer our assistance in assuring that the 21 provisions are implemented to the fullest 22 extent. Thank you for this opportunity. 23 MR. BERKOWITZ: Questions from the 24 council? 25 MR. MANGANELLI: How much CO2? You 125 1 mentioned something about 15 million tons of CO2 2 from our landfill. How much CO2 comes from 3 burning of this material? 4 MS. BISHOP: I'm going to defer to one of 5 my associates. 6 MS. SOOS: I can provide you emission data 7 from the facilities. I don't have those numbers 8 with me. 9 MS. BISHOP: We have some very valuable 10 information about our industry, what we're doing, 11 some of the things we put together and I would be 12 more than happy to share that with anyone on the 13 council. 14 MR. BERKOWITZ: In your industry you wanted 15 to look at landfills as generators of gas rather 16 than just landfills, do you see a way we can 17 alter these environmentally and rethink what we 18 did in the past? 19 MS. SOOS: If I can answer that, Mr. 20 Chair? In fact, EPA has actually, as several 21 states has, moved ahead as well to require that 22 landfills do indeed get permits landfills 23 emissions not only from the--if they have a met a 24 gas recovery system and sometimes they just flair 25 it sometimes they recover energy with some sort 126 1 of engine because the open stays of the will have 2 itself, they are significant air emissions that 3 come off of air, and EPA has issued to the 4 largest landfills in the state and the country 5 and then certain states have moved and 6 implemented this for additional landfills. Their 7 requirement that they from the landfill because 8 it comes out of the open face for many years even 9 after the landfill closes. 10 MR. MANGANELLI: On of the problems we've 11 had in New Jersey has been with the resource 12 recovery plant you're talking about for 13 generations the perception that they're highly 14 pollutional. What kind have a public education 15 program, because this will tie in what we're 16 looking for, do you carry on to overcome this 17 perception? 18 MS. BISHOP: We've worked with community 19 groups. We've also touched base and worked 20 closely with our legislature. We also have 21 talked to folks on Capital Hill. But, you know, 22 often enough, we need to get out the message even 23 more and share the information that we have. 24 Because we have a lot of good information, and we 25 had made tremendous strides in reducing the 127 1 amount of pollutants that comes out of our 2 equipment. So I think we have engaged in a 3 campaign to talk about who we are and what we can 4 do. But I think we can probably do more of that. 5 MR. PALMER: For a variety of reasons, 6 waste energy plants in New Jersey have been 7 financial nightmares. How has this been avoided 8 in other states, the fact that these things 9 operating in a way that works financially? 10 MS. SOOS: If I can answer that. New 11 Jersey's unique because New Jersey is the only 12 state that's regulated solid waste as a utility. 13 Communities around the country that have waste to 14 energy waste management system with a recycling 15 component are communities that are digging up old 16 contaminated landfills. So they have a system 17 feed for their solid waste so they charge one fee 18 and they manage their whole system. Several 19 years ago the court ruled that flow control, kind 20 of the mechanism that would allow communities to 21 build and finance these systems, they ruled that 22 wasn't constitutional because it violated the 23 laws. Most states have adjusted their systems. 24 And in some cases, they say they've eliminated 25 some of the other programs. New Jersey is a 128 1 unique, one, because of its size, two because of 2 its population. And because it has been 3 regulated as a public utility, it's almost the 4 electricity industry was where you don't have the 5 system you used to have, but you don't have an 6 open market yet, so that's kind of where it's 7 at. 8 MR. PALMER: Two or three states have done 9 a really good job in making this whole system 10 work so we get the waste energy a reasonable 11 cost. 12 MS. SOOS: A lot of the states and the 13 northeast, actually, Florida is a perfect 14 example. I think they have 14 waste plants 15 there. For environmental reasons they have very 16 low groundwater, solid waste prices are very 17 competitive with landfill prices. I think you 18 can point to one of the numerous states. There 19 are 28 facilities around the country and the only 20 place where we see this type of situation that we 21 do in New Jersey, frankly, is in New Jersey. But 22 part of the it is also-- 23 MR. PALMER: Who's at the other end of the 24 spectrum, besides Florida? 25 MS. SOOS: Massachusetts, I think 129 1 Connecticut, they have a lot of waste in 2 Connecticut. 3 MR. MANGANELLI: What kind of tipping fees 4 do they have? 5 MS. SOOS: Well it depends on average, they 6 are competitive with whatever the local landfill 7 prices. 8 MR. MANGANELLI: Can you give me a number? 9 MS. SOOS: Landfill prices in Minneapolis is 10 $50.00 per ton. Ours is $45.00 per ton. 11 MR. BERKOWITZ: Okay. Any other questions 12 from the Council? Thank you very much. 13 (at which time a lunch break was taken) 14 MR. BERKOWITZ: Our next scheduled speaker, 15 I don't see, Steve Gabel. So with that, I'll ask 16 Jim Sinclair to lead off the afternoon session. 17 MR. SINCLAIR: I'm Jim Sinclair, first vice 18 president of the New Jersey Business and Industry 19 Association. I'm just looking for my cards. 20 Bill O'Sullivan said he was here to hear me 21 speak, and basically I'm here to say what I said 22 last year and the year before that and the year 23 before that. But about this electrical 24 regulation, deregulation bill, what people said 25 this morning that this is a comprise bill, and 130 1 from our perspective at the Business and Industry 2 Association, it's a comprise. We certainly 3 didn't get everything that we wanted for the 4 general business community out of it. But it's a 5 bill that really reflects a lot of effort. And I 6 think that I have been impressed by Assemblyman 7 Bagger and Assemblywoman Murphy's efforts and the 8 grasp of the real issues behind that. And I 9 think that's what you're here to talk and listen 10 to today, is about those issues that really 11 surround this thing. The bill itself has, I 12 think, focused on economics, on cost, on the cost 13 of energy in New Jersey. And back in the '80s, 14 when we were publishing the Grant Thortan studies 15 and then the Grant Alexander of the manufacturing 16 claimant in the country and New Jersey 17 participated, we always ranked down at the bottom 18 in the study on the energy cost as a thing that 19 impacts negatively on attracting and keeping 20 manufacturing businesses, not just chemical 21 companies, but other kinds of manufacturing 22 concerns that we have in New Jersey. And my 23 story, I guess, to tell you how this relates; 24 last summer, I went to a manufacturing facility 25 in Middlesex County, and they make beverage, 131 1 dehydrated beverages like teas and coffees, and I 2 won't tell you who it is, but they're a world 3 leader in this. And in their company, one of 4 their real concerns were the cost of energy to 5 produce their product. They took me to the table 6 and showed me the spreadsheets that they had to 7 compare their facility with other facilities, not 8 just in the United States, but throughout the 9 world. And it was shocking to look at the 10 numbers in terms of the cost of energy. The only 11 place in the world, and they had about 17 12 facilities throughout the world where they 13 produced basically the same kind of ingredients, 14 these were similar plants, but the only place the 15 energy was higher was in Japan. And it was 16 significantly higher in the United States than 17 the other 15 countries that were below it. And 18 the reason I bring this up is, in a global 19 marketplace, the cost of manufacturing a product 20 that can be controlled is extremely important to 21 be able to compete. And energy is one area where 22 we haven't been able to compete and hopefully 23 this process, and that's really our position at 24 the Business and Industry Association, hopefully 25 this will allow us to compete better. And back 132 1 to Bill's hearing the thing, every year I come in 2 here and say what we really need to help the 3 quality of air in New Jersey is to have national 4 standards, to be able to have the upwind states 5 where the thing is blowing in from, have at least 6 the same kinds of standards that we have in this 7 state. And I guess I'm happy to come here today 8 to say that I think that we've been making real 9 progress. If you listen carefully to what the 10 Commissioner said and Assemblyman Bagger, that 11 the kinds of controls that we've been putting on 12 electrical generating stations that are going to 13 go into effect on the NOx should help us in the 14 long run. And it depends on how you define long 15 run, but this is going to help our air quality in 16 the state. Now, I think we sort of had to make a 17 pact with the devil here to get that, and that 18 goes back to last year's thing whether we should 19 be changing the standards to the eight hour and 20 the PM ten, and I made my position clear on that 21 and I still believe that. So now we can have 22 sort of this schizophrenic announcement the 23 Commissioner can make when they talked about how 24 good the air is in the state, that we've only had 25 four violations over the last summer compared to 133 1 the 20 or whatever it is in the previous year. 2 Because, of course, now we have the new standard 3 where we have 48 violations or whatever the 4 number was. I think it was 48, was the number. 5 But we knew that was going to happen. There are 6 really three things in this process on electrical 7 deregulation, it's the cost, the availability and 8 the impact on the environment. And the cost, we 9 need to drive the cost down. That's really 10 important. But the availability of energy is 11 also important to the business community. Both 12 on the short term, and they use the thing about 13 making sure that when you walk-in to the room you 14 can turn the light switch on and that, to us, was 15 important. But in the long term, to have an 16 energy supply for a growing and expanding 17 economy. And on one hand, and this is the 18 schizophrenia again that you're facing and that 19 we're facing in the business community. On one 20 hand we're talking about strategies that's going 21 to give us cleaner energy, give us less energy 22 and by less energy, I mean, if you look at the 23 Commissioner's charts, which I did, and his 24 greenhouse gas strategy, which was really the 25 first time that I saw that, we're talking about, 134 1 in the time frame here, a reduction in the amount 2 of fossil fuel that is consumed. I mean, you 3 count up the carbon atoms, and according to this, 4 we're going to have three percent fewer of these 5 carbon atoms bonding with oxygen and going into 6 the air, three percent less than we had in 1990. 7 And from our perspective, 1990, we were in a 8 sagging economy in New Jersey. We've been 9 booming since then. So that three percent 10 reduction isn't really a three percent from now, 11 that's a huge number. And I really don't know 12 what that number is because I really haven't 13 seen, and what I have seen, I don't believe on 14 the base, because I think while it's a good 15 effort, I think we're making up a lot of those 16 numbers. But that also is another story. So the 17 question of energy efficiency and reducing the 18 amount that we use, really ties into this whole 19 clean air concept and how we tie into other 20 states. And I think that it's--as much as I have 21 been bad-mouthing those coal fired plants out of 22 state because they are making our air worse in 23 New Jersey, the necessity in the long run of 24 being able to utilize coal to provide energy, I 25 don't think anybody can question that. So what 135 1 we need to do in the long run on the national 2 level, is figure out how to use coal in an 3 environmentally better way. And I think that's 4 the real answer on that. And so, anything that 5 we do in terms of supporting new technologies, 6 not only the environmental technologies that we 7 were talking about, the class one technologies, 8 but the coal technology, if we can figure out how 9 to use that better to have it less polluting here 10 in the long run, we're going to need that energy 11 that we get from coal. The Commissioner, and 12 almost as a throw away, but everybody else in the 13 same thing, talking about nuclear. In this 14 equation, in terms of clean air, nuclear power is 15 really a benefit. When we get rid of the 40 16 percent, we're going backwards. When we take the 17 40 percent that's being supplied by nuclear, the 18 Commissioner said, almost as a throw away, we're 19 going backwards in this equation. So I think 20 that in terms of technology and where we're 21 going, clearly somebody in the United States, it 22 isn't going to be in New Jersey where we're doing 23 this, but somewhere, someone's going to have to 24 be thinking about and looking at the European 25 Union and how they're using nuclear power and 136 1 also how we may be able to put nuclear power on 2 line. Deal with the waste products and deal with 3 the cost in this. Public service didn't say 4 this, but I can say it as a consumer, going 5 through the horrendous process of getting one of 6 these plants on line and keeping them on line 7 just from the bureaucratic standpoint has got to 8 cost lots and lots of money in the process. We 9 have to figure out how to better design, permit, 10 and operate these facilities and deal with the 11 waste products. And the last part of this 12 equation is the whole question of, if we're 13 really expanding, we have an expanding economy 14 here, that means growth. That means we have an 15 increased demand for energy. And we do have an 16 increased demand. That is real. So we have to 17 figure out, whereever it is, to move it around. 18 And we need to be able to put in additions to the 19 grid and interconnects and not only electric, and 20 I know we're talking about electric today, but 21 also gas, natural gas. If that is an alternative 22 to a coal fired plant, perhaps in New Jersey, 23 then we need to be able to get the gas supply 24 in. If natural gas is going to be a fuel that's 25 going to be used in this, then we need to get in 137 1 the supply in. And we can't have bills like pick 2 one out here, Assemblyman D'Catano's bill and 3 Assemblyman Kelly, who wants to stop an extension 4 of the gas pipe line from the west because it 5 goes through their district, even though it's an 6 existing ride of way and paralleling and existing 7 line, somehow we had we're going to have to 8 address that. 9 MR. BERKOWITZ: Three minutes, Jim. 10 MR. SINCLAIR: Okay. I thought I was going 11 to be a lot briefer than this. And then the last 12 thing is that there are proposals on the table, 13 and I know Assemblyman Wisnewski is not here, but 14 Senator Venadent and Senator Allen, they're 15 putting this thing back to the table to go back 16 and look at the bill and add these sort of things 17 that the environmental community, somebody said 18 the fringe group, but I won't say fringe, I want 19 to put these things back on the table. And we 20 haven't really even given this process a chance 21 to work. There are lots of safeguards in it, 22 there's a lot of flexibility in it, and we ought 23 to look at it before we change everything. 24 Because clearly the message that we all got and 25 everybody said it and I will resay it, that no 138 1 matter what we do here in New Jersey, those 2 plants will still be operating. So if you put a 3 tax on, it's a moral tax. If you decide to buy 4 higher power, green power, you're doing that as a 5 moral kind of thing because you're moving some 6 agenda forward. But it's doing nothing to help 7 our air because it's not shutting those plants 8 down. What's going to help those plants are the 9 controls that are being put on and that will come 10 on in the future. So really, I guess I've said 11 the same thing every year and I'm still saying 12 it. Thank you. 13 MR. BERKOWITZ: Questions for Mr. Sinclair 14 from the council? 15 MR. SINCLAIR: Dr. Manganelli, he always 16 asks me a question, he's not here. 17 MR. BERKOWITZ: Mr. Gabel is here from 18 Gabel Associates. 19 MR. GABEL: Thank you. Good afternoon. My 20 name is Steve Gabel. I'm a consultant with Gabel 21 Associates. We're an energy and environmental 22 consulting firm up in Highland Park, New Jersey. 23 I'm here today on behalf of the independent 24 energy producers of New Jersey who are New 25 Jersey's non-utility producers of power within 139 1 the State of New Jersey. And they now represent 2 about 13 percent of New Jersey's electric 3 generating capacity on a physical capacity basis 4 on an energy production basis. Depending on the 5 year, they're usually somewhere between 20 and 30 6 percent of the electricity that's produced to 7 serve New Jerseyans. And I'm happy to be here 8 today, I was here last year as well and I 9 appreciate the invitation. What I want to talk 10 about briefly this afternoon is what we think and 11 what I think makes sense in terms of an 12 environmental policy in New Jersey. I want to 13 really build on two foundations. One is the 14 strong efforts of DEP that have already taken 15 place in respect to promoting clean 16 technologies. And it's a very sound permitting 17 process. The second foundation is the electric 18 deregulation bill that Governor Whitman signed 19 into law about a month and a half ago. I'm going 20 to take those two things as given and then kind 21 of work out from there, talk about a few things. 22 The first is really, just to give you a picture, 23 at least to me, this is one picture that tells 24 the story of what's going on inside the power 25 system within this region. New Jersey is part of 140 1 the Pennsylvania, Jersey, Maryland Interchange, 2 that is, it's part of a transmission grid that 3 runs from New Jersey out to western 4 Pennsylvania. We are interconnected with points 5 to the south, points to the midwest, points to 6 the north. But the system that runs smoothly and 7 is intergraded is the PJM system. This chart, I 8 think, to me, tells a story on what's going on 9 inside that power system, not with respect to the 10 cost of power supply, but with respect to the 11 emissions impact and where kind of the lay of the 12 land is when you look at what the power supplies 13 impact is on New Jersey's air quality. And as 14 you work over from left to right, what I put up 15 on the big bar, is American Electric Power, which 16 is the largest coal producers, coal electricity 17 producer from coal in this country. The next bar 18 is the PJM power pool as an average NOx emission 19 rate. The next one is the New York power pool 20 just north of the us. The next smallest bar is 21 the New Jersey utilities. And the tiny little 22 bar right here is the independent power industry 23 in New Jersey. People, I guess, have talked 24 about coal versus nuclear versus oil versus gas. 25 To me the real fair contrast to me isn't always 141 1 fuel versus fuel. What this chart really tells 2 you is old versus new. The IPP's have all come 3 on line in the last ten years, some in the last 4 three or four years. What you see out with AEP 5 and the power pools as a whole is a lot older 6 stock of generator. In fact, some generators 7 which have been grandfathered under provisions of 8 the Clean Air Act and they have controls that are 9 significantly less stringent than those that a 10 new power plant would have to put in place if 11 they wanted to go on line. So that's really the 12 story that's out there. And as the industry 13 moves into a time of competition, retail 14 competition begins in New Jersey later this year, 15 probably enrollment will start in August, sign up 16 of retail customers will probably start sometime 17 in October. But the fact of the matter is that 18 wholesale competition, exchanges of power for 19 money among wholesale buyers of power has been 20 going on very strongly in the region for at least 21 the last five years, if you ask some people a lot 22 longer than that. And the wholesale competition 23 is exactly not about this, it's about the cost of 24 that power supply, and it shouldn't come to too 25 much of a surprise that the cost of power from an 142 1 older plant with lesser controls, with lesser 2 operation and maintenance expenses from coal is 3 going to be a very tough competitor in the 4 marketplace against facilities that have to meet 5 much stricter air pollution standards. Don't 6 take that comment for a second to believe, to 7 conclude, that New Jersey should back away from 8 its stringent standards. I think New Jersey, 9 absolutely, should stick with it. What it does 10 mean, I think, and this to me is the biggest 11 recommendation that I would offer out of my 12 comments, is that New Jersey should stick to its 13 guns at the federal level. I'm sure you're all 14 aware of the things happening with the NOx call, 15 with the OTAG group and a few other initiatives 16 by EPA that are trying to levelize that permit 17 playing field across the different states, it's 18 imperative that New Jersey stick to its guns, 19 keep the strong policy approach to try to have an 20 equalized permitting process and equal, fair 21 permits requirements across power generators 22 across the country. Without that, the notion of 23 real, fair, sustained competition among power 24 suppliers is not going to be real. So that would 25 be the first lesson that I take away from this 143 1 type of thing when you later on the cost issues. 2 The second issue, and it relates to, again, this 3 little bar right here, and that's that the IPP 4 NOx emission rate is much lower, both because 5 these plants are new, but also because they 6 engaged, most of them, in cogeneration. At the 7 site in which they're located, they not only pump 8 electricity into the grid, they're also providing 9 thermal energy to a large industrial host. The 10 two biggest examples in the New Jersey are the 11 Tasco Refinery, when was able to put aside some 12 old industrial boilers in order to take its steam 13 from the plant, cogeneration plant that's now run 14 up there by East Coast Power. And down at the 15 Dupont Plant down in Deep Water where US 16 generating provides thermal energy to the large 17 Dupont chemical facility down there. 18 Cogeneration, obviously, not only gives you these 19 benefits, but it also takes out an industrial 20 boiler and to an extent, you recognize that 21 benefit of cogeneration in allowance trading 22 programs in emission trading programs as the 23 thermal benefit of that technology. You'll begin 24 to push that technology even further within the 25 State of New Jersey. The fourth issue that I 144 1 wanted to touch on is to ask DEP, and ask you to 2 keep DEP managing the permit process in an 3 efficient manner. The real competition in the 4 industry, as I mentioned, is going to be probably 5 between the old coal plants, which begin to 6 either increase their output and their capacity 7 factors or take actions to increase their 8 capacity overall, versus the new plants that will 9 probably spring up on the east coast of the 10 country if the process is set the right way 11 because of a locational difference. There are 12 locational benefits to having power plants closer 13 to load the way the system is managed, price 14 signal is send called locational marginal 15 pricing, which tells generators they get an 16 economical benefit if they are closer to the 17 electrical load and away from the transmission 18 constraints that exist in this country. As a 19 result of that competition, old coal, new 20 technologies, it's important that as these new 21 technologies are developed that can displace the 22 old coal, that the DEP continue its very 23 impressive efforts to make the permitting process 24 more efficient, more timely, move the process 25 along while also protecting the public health as 145 1 they do that. The fourth issue I wanted to touch 2 on briefly was the issue of environmental 3 disclosure. You possibly heard about this 4 earlier today. The BPU working with the DEP over 5 the last two years has been trying to put in 6 place a system that will tell retail customers 7 not only how much their electricity costs, what 8 the environmental impact of the energy that they 9 buy. The notion of green power is real, if it's 10 done the right way. If it's done the wrong way 11 it could basically be a shell game of companies 12 putting a green label on something but really 13 accessing supplies from the same power grid that 14 they would have accessed the supplies from 15 anyway. So we need a meaningful system of 16 disclosure that really enables the BPU and the 17 DEP to have some reasonable mechanism to track 18 the supplies without imposing too much cost on 19 the suppliers who are going to have, ultimately, 20 the obligation to track the supply. You don't 21 want to make the cost of tracking too excessive. 22 But disclosure of emissions and fuel mix is a 23 real way to give consumers the ability to move 24 New Jersey's power supply from a dirtier to a 25 cleaner source of energy. To summarize, then, I 146 1 would ask that this group keep and help DEP to 2 keep the pressure on at the federal level to 3 equalize the playing field on permits, to keep 4 the process of granting permits and giving 5 permits an efficient one. To find ways to do 6 cogeneration within the trading programs the DEP 7 operates and is involved with, and to keep its 8 work going with respect to disclosure for retail 9 customers. Thank you. 10 MR. BERKOWITZ: Thank you Mr. Gabel. 11 Questions from the council? 12 MR. SPATOLA: Steve, among the independent 13 power producers of New Jersey, is that all 14 produced and used locally or is the IPP also 15 utilizing the PJM grid they place the board 16 powered supply? 17 MR. GABEL: Most of the independent power 18 plants in New Jersey at this moment in time have 19 their power supplies locked into long-term 20 agreements with the local, the four electric 21 utilities in New Jersey. They sell it wholesale 22 to those utilities that resell it to their 23 customers. The market is opening up, however, 24 and as new plants come on line, in all 25 likelihood, they would not be able to get 147 1 long-term, they're going to have to go through to 2 what's called a merchant mode and try to sell 3 their power either to the PJM grid or find retail 4 sellers of power where they can move that power 5 to. 6 MR. BERKOWITZ: Steve, we haven't had the 7 benefit of having testimony from BPU for whatever 8 reason today, and I don't believe there is 9 anybody from BPU who is going to testify. 10 Apparently, there is a hearing tomorrow at 1:30 11 to 4:30 at Two Gateway Center. Have you reviewed 12 the disclosure labels? And what are your 13 thoughts about the disclosure process and the 14 labels? 15 MR. GABEL: I think there's a lot of 16 intricacies that need to be worked out with 17 respect to what people in the industry call the 18 tracking mechanism. If you buy from a green 19 supplier, it goes kind of almost without saying 20 that the power that the green supplier, when they 21 have hydro power or wind power or solar power 22 entering the system here, those aren't the same 23 electrons that go through your meter. As a 24 result of that, the tracking mechanism of 25 verifying that the power supplier that you bought 148 1 that power from, actually injected more green 2 power into the system because of you, becomes a 3 very difficult, complicated process. And that's 4 where the rule doesn't go directly into that 5 issue, it talks about a process to address that 6 issue. And that's the real tough issue in 7 there. With respect to what the rule does on 8 what ought to be disclosed, I think it's a very 9 positive role, and that is that it has all power 10 suppliers will have to disclose their fuel mix. 11 So if you can kind of picture a pie with 12 different pieces of the pie telling what the fuel 13 type is, and they'll have to tell, I think, their 14 NOx, their SOx, their CO2 emissions from each 15 plant. So if you can kind of imagine a bar chart 16 showing what the emissions are from the supplier 17 you bought from and a line on there showing maybe 18 what the regional or state average is. You'll 19 get a sense, you'll be able, as a customer, to 20 get a sense of what you're buying. 21 MR. BERKOWITZ: And it's your belief that 22 somebody who is interested in trying to educate 23 themselves in making an informed decision as 24 compared to the labels comparison that need to be 25 made? 149 1 MR. GABEL: Yes. 2 MR. BERKOWITZ: Thank you. Any other 3 questions from Council? 4 MR. SPATOLA: One last question for you, 5 Steve. I know that you presented a chart on the 6 efficiency from independent power producers 7 versus other sources of electricity in the state, 8 but how does that also compare in for one hour 9 versus a more bulk of the producers? 10 MR. GABEL: The older plants from the 11 midwest, the coal, the older coal fired plants, 12 are significantly less expensive on a running 13 cost basis, putting capital cost aside, to 14 produce a kilowatt of electricity would probably 15 be between one and two cents per kilowatt hour. 16 And for a newer advanced technology, depending on 17 the cost of the fuel, would probably be between 18 two or three cents. Anywhere from ten to thirty 19 percent price differential between the two 20 sources, which in a competitive market is a very 21 wide defence. 22 MR. BERKOWITZ: Any further questions? If 23 not, I'd like to thank you, Steve. Good seeing 24 you. Thank you very much. Our next person will 25 be Mr., and please forgive me if I'm 150 1 mispronouncing this, Bi bbo from the Sciences 2 Services Inc.. Not present. I think our next, 3 perhaps, final speaker is Michelle McMorrow, 4 regional director of Burning Issues. 5 MS. MC MORROW: I want to thank you very 6 much for giving me an opportunity to speak 7 today. I came to Burning Issues by way of 8 calling the USEPA when I was trying to learn more 9 about wood smoke pollution. I would like to give 10 my support to the last speaker's point of view 11 about pursuing. 12 MR. BERKOWITZ: Can you redirect the 13 microphone so everybody hear. 14 MS. MC MORROW: Thank you very much and 15 thank you for giving me the opportunity to 16 speak. I'm going to read my notes to you. What 17 I was also trying to do was give my support to 18 the previous just speaker's point of view. I 19 came to Burning Issues by way of USEPA. I called 20 them in desperation to find out more about wood 21 smoke and the impact on the human condition. My 22 concerns go, perhaps, a little afield of what 23 your main focus is today, but they certainly tie 24 in with the deregulation of the industry. We've 25 all gone through the pros and cons of the 151 1 communication industry's deregulation and we've 2 observed all the professional as well as amateur 3 participants that entered that industry 4 immediately afterward. With the deregulation of 5 electric utility, a number of us are concerned 6 that we'll see the same kind of participation in 7 the amateur participants in this industry. And 8 before you make any decisions, hear me out a 9 little further. Asthma, back in 1997, Newsweek 10 May 26, reported that asthma in America was 11 afflicting some 14.6 million of us, including 12 five million children. The number represents a 13 jump of some 61 percent since the early 1980s. 14 According to the National Center for Health 15 Statistics, the asthma has increased in every age 16 group with the hardest hit being the children 17 under 18 years. For them it was a 73 percent 18 increase from 1982 to 1994. And the death toll 19 was doubled, 5,000 each year. Right now we're 20 probably looking more towards the effects of 21 ground level ozone as we're going in to the warm 22 summer months, a combination of pollutants from 23 smoke stacks, paint, solvents and a variety of 24 other things are contributing there. We know 25 that two cycle engines are still far more 152 1 polluting than they need to be. Probably need to 2 go to the next phase of auto emissions by 3 demanding more efficiency, especially from the 4 SUV and diesel engine manufacturers. Commercial 5 vehicles are, I believe, long overdue for the 6 same kind of emission study and scrutiny than 7 we've done for the private vehicles. The oil 8 industry must produce low sulfur gasoline and 9 eliminate the MTBE which is sensitizing to a 10 great number of people and has been found to 11 poison our water supply. Methyl bromide, which 12 you don't hear too much about in the news, which 13 apparently is a significant participant in the 14 production of ozone, and that production in the 15 country has been halted, but apparently the use 16 of methyl bromide goes on still to this day. 17 USEAP Office of Air Quality Planning and 18 Standards identified other air pollutants that 19 are grave concern, carbon monoxide and 20 particulate matter. I think we all pretty well 21 know about carbon monoxide, but I think a little 22 more attention needs to be paid to particulate 23 matter. The tiny particles and unburned 24 materials suspended in the air, they're so small 25 that they pass by the lining in the nose and the 153 1 throat, and they become embedded in the lining of 2 the lungs. Most wood smoke particles actually 3 average less than one micron which allows them to 4 remain airborne for as long as three weeks. Wood 5 smoke in particular from a fireplace or wood 6 burning stove or even camp fire, contains 7 creosote, soot and ash. And these particles are 8 so small they filter into your home even when you 9 have your window closed and your doors closed 10 tight. Inhalation of this particulate matter 2.5 11 causes coughing, irritation, scarring and damage 12 to the lungs. It contributes to cancers and to 13 heart decease and to changes in DNA which can 14 lead to autoimmune disease. Particulate 15 pollution is also thought to be a contributing 16 factor these days to sudden infant death 17 syndrome. The highest PM levels measured 18 consistently result from the burning of solid 19 materials. Smoke from wood combustion is 20 entirely in this range. In the packet that I 21 will supply you with, there's a chart of average 22 emission of fine particles. The sources in that 23 chart are broken down in an hourly fashion. But 24 if you take a look, you'll see that gas furnace 25 creates particulate matter, 0.001 grams per hour 154 1 and in 24 hours that's a .024 grams total. An 2 oil furniture in one hour creates .02 grams for a 3 total of a daily production of .48 grams. A 4 certified wood stove, which the EPA currently is 5 supporting, creates 8.2 grams per hour or a total 6 of 196.8 grams in a given day. And a 7 non-certified wood stove of which we have the 8 most in this state, I'm sure, is 15.6 grams per 9 hour or 374.4 grams in a day. Summary of 10 emission characterization and a noncancer 11 respiratory effects of wood smoke and EPA 12 document that is listed EPA 435-4, indicated that 13 for children in homes where wood is burned and 14 living in communities where wood smoke is 15 prevalent, the smoke causes a decrease in lung 16 capacity and increases in asthma attack. The 17 frequency and severity of general respiratory 18 illness is increased, emergency room visits are 19 increased, and the higher rate of school 20 absences. About 50 percent of airborne 21 polynuclear organic material comes from 22 residential wood burning overall. POMs include 23 another group of compounds, polycyclic aromatic 24 hydrocarbons, which contain many carcinogens and 25 USEPA estimates that the cancer risk from wood 155 1 smoke, which I find this interesting, is 12 times 2 greater than that from the equal amounts of 3 tobacco smoke. It also remains viable longer. A 4 study in Louisiana State University discovered 5 that free radicals produced from wood smoke are 6 chemically active for 20 minutes, while tobacco 7 smoke radicals are chemically active for 30 8 seconds. I'll take my chances with that one. 9 Thank you. There are over a hundred different 10 chemicals and compound groups in the emissions of 11 wood burning. In addition to the previously 12 mentioned, there's formaldehyde, methane, VOCs 13 benzene, phenol and nitrogen oxides, and that 14 combines, as you know with the ozone. Unless the 15 house is pressurized with extensive external air 16 intakes and coupled with a highly sophisticated 17 filtration units, the pollutants of the person 18 who is doing the wood burning will also integrate 19 their home because the smoke goes up the chimney, 20 it's generally heavier than the air inside, and 21 as it exists the stack and is drawn back in hence 22 the fire goes from raw oxygen to continue 23 burning. The low stacks, I mean that generally 24 speaking, the smoke stays down at ground level, 25 and it also ensures the contamination of the 156 1 surrounding neighborhood. On a daily basis and 2 just about year round I check into New Jersey's 3 DEP air monitoring web page, and invariably I 4 see, even in the winter, the moderate air quality 5 due to particulate matter and smoke pollution 6 often as early as seven a.m. in the morning. On 7 days when the wind drops or comes in from the 8 ocean, that moderate rate very quickly 9 deteriorates. Ground level ozone, as I'm sure 10 you folks know, is already an issue and it's only 11 April. I think that's probably, it looks like 12 we're in a brace right now as to whether or not 13 ozone or particulate matter will win the day on 14 any day. Since 1973 with the oil embargo, the 15 sale of wood burning stoves has skyrocketed. The 16 shiny knew smoke stacks in every residential 17 neighborhood can attest to that. And most of the 18 condominiums and town homes that I have looked 19 at, they offer electric heat, clean electric heat 20 and conversely they offer supplementary wood 21 stove. And the indication is that wood smoke is 22 not that bad a thing. And when you look again at 23 that emissions chart, it seems is this we're 24 laboring under that misconception that wood smoke 25 is green. It's natural, therefore it's healthy. 157 1 And wood smoke is, in two words, air pollution, 2 plain and simple. The more efficient fuels, the 3 natural gas and oil burned clean because our 4 government has regulated and imposed standards, 5 so that they wind up burning clean and ensuring a 6 healthier life-style for everyone. As you can 7 see, the wood stoves are at least a hundred times 8 more polluting than the gas furnaces and the old 9 wood stoves are probably about a thousand times 10 worse. There's just no way to burn wood, not 11 safely. According to the natural resources 12 defence council, 64 thousand people probably die 13 prematurely each year from cardiopulmonary cause 14 linked to particulate pollution. England began 15 to mandate a clean fuel use following their air 16 inversion in 1952 that killed 4,000 people. It's 17 called, what did they call it there, the UK Clean 18 Air Act of 1956 came about because solid fuel 19 combustion was a significant contributing factor 20 in the deaths of those 4,000 people. Star Ledger 21 in December of '98 listed to our population 22 density at approximately 1034 per square mile. 23 If we're going to legislature for clean air as it 24 applies to a tobacco smoker, how can we ignore an 25 issue that is 12 times more deadly and far more 158 1 evasive than tobacco smoke? My goal is not to 2 minimize the concerns of the industrial pollution 3 incineration. And I'm not here to excuse, if you 4 will, the emission from our western neighbors. 5 I'm here to target the enormous ignorance that's 6 contributing as much as 50 percent or our 7 pollution here in the State of New Jersey. We, 8 the public, have got to take responsibilities for 9 our actions. Not every problem can be pinned on 10 the pocketbook of an industry. Individuals who 11 make poor decisions will impact themselves and 12 their neighbors, and what we need to bring 13 industry and compliance, we also have to begin at 14 the bottom of the pile and work, starting with 15 the amateur incinerator operator who is the 16 residential worker. The information and science 17 is available to us. Burning Issues has a website 18 that has complied some 300 scientific papers, 19 most of them have been accomplished by the USEPA 20 and some other original studies. The New Jersey 21 DEP needs to bring this to light, they need to 22 enforce good public health for all of us. I've 23 been assured that we don't have an open burning 24 policy in this state, but I have been told that 25 farmers can obtain annual burning permits. Burn 159 1 days are dependant here only on fire conditions. 2 No consideration is given to the air quality 3 status or the daily forecasted conditions for 4 human health. One call to the Forestry Service 5 and you can light the match. In Washington 6 State, this year, they've notified the grass seed 7 industry that they're no longer able to conduct 8 open field burning. The health of the residents 9 takes precedence over the profits of their 10 industry. I'm sure their density can't hold a 11 candle to ours. In Iowa, Nevada and 12 Pennsylvania, last year, law students were 13 successfully filed against residential wood 14 burners by their neighbors. The details can be 15 seen on the Burning Issues' web page. The upshot 16 here is that the clean non-polluting fuels are 17 available. The court found for the plaintiff's 18 right to clean air in the home, clean air on the 19 property. This past weekend I noticed that my 20 garden centers are being flooded with a clay 21 version of a wood stove, a chiminea from Mexico. 22 Customers are now being encouraged to go and burn 23 wood or coal on their patio and have a lovely 24 outdoor wood fire for the summer. That's open 25 burning. This should not be even for sale in 160 1 this state. We need to get the State of New 2 Jersey to take a second look at this. It occurs 3 to me that as long as they ever there's enough 4 particulate matter being generated by our 5 population, there's no way for scientists to 6 prove the negligence of corporate entity. Right 7 now most residential wood burning is coming to a 8 halt. With these chimineas, I'm sure we're going 9 to see a lot more wood burning, and at same time 10 the power plants to the west that we've been 11 hearing about are going to be cranking up in 12 earnest burning wood, coal, whatever is cheap. 13 So the question is, how many wood burners does it 14 take to nullify any attempts by scientists to 15 read particulate matter data and to identify the 16 power companies or any other industry or anyone 17 else as a polluter? And I would say that we've 18 met the enemy and he is us. I would hope that 19 you folks will be able to mount some kind of an 20 informational and educational campaign, public 21 and influence, some kind of controls for the wood 22 burning. Both the public and private. Thank 23 you. 24 MR. BERKOWITZ: Thank you. Any questions 25 from the council? At this point, this concludes 161 1 the list of speakers that I have before me. Is 2 there anybody else in the audience that wishes to 3 be heard on the issue of energy deregulation? If 4 not, I've been advised that the Commissioner 5 would like to say something. 6 MR. SHINN: Sorry to get on your agenda 7 twice in one day, but it was a little premature 8 this morning to talk about this, but New Jersey 9 is filing a 126 Action against a group of states 10 south, as far as North Carolina and west to 11 include Illinois and North Michigan and New 12 York. So it's the transport line west and 13 certainly south to include North Carolina. So 14 it's not something that we've done lightly. 15 Quite frankly, we became concerned when a lot of 16 us, a lot of the states that voted for the OTAG 17 solution and recommendation of the EPA through, 18 probably several reasons, changed their 19 position. And states like Ohio and Indiana and 20 North Carolina, to name a few. And we're sort of 21 in a unique position to take advantage of the 22 subregional modeling that EPA did. EPA took the 23 OTAG model and did it from a state perspective, 24 and we took the opportunity of bringing that 25 modeling into our program and identify that in 162 1 the state implementation plan call. So we think 2 we have a technically sound basis for making the 3 126 Application. And so, essentially, I'm 4 signing that and processing it as of today. 5 Those of you who are interested in that aspect of 6 our air program, it's done. Thanks a lot. 7 MR. SPATOLA: The Clean Air Council, today, 8 aware of this action, has passed a resolution in 9 this regard. And I would just like to readjust 10 the last portion of our resolution as it applies 11 to Section 126. If you want I could read the 12 whole thing to you. This is done by the Clean 13 Air Council today, the 14th of April. It says, 14 WHEREAS: New Jersey has taken strong efforts to 15 control ozone precursors within its boundaries. 16 WHEREAS: Emission reductions from sources located 17 in New Jersey alone cannot bring the State into 18 attainment, because ozone and ozone precursors 19 transported from outside the State continue to 20 impair the State's air quality; 21 WHEREAS: New Jersey has therefore played a strong 22 leadership role in the National Governors 23 Association, the Environmental Council of the 24 States, the Ozone Transport Assessment Group and 25 the Ozone Transport Commission in promoting 163 1 cooperative and innovative solutions to regional 2 environmental challenges; 3 WHEREAS: New Jersey has also played a leadership 4 role in fostering coordinated regional ozone 5 reduction actions among the twelve Ozone 6 Transport Commission states and the District of 7 Columbia such as the NOx Budget Program for large 8 stationary sources which calls for a seasonal 75% 9 NOx reduction from electric generators by May 10 2003, along with an interim 65% NOx reduction 11 beginning in May 1999; 12 WHEREAS: Based on the OTAG Assessment, the US 13 Environmental Protection Agency has determined 14 that ozone precursor emissions originating from 15 sources located in midwest and southeast states 16 significantly contribute to ozone standard 17 exceedances in New Jersey, which is consistent 18 with e North American Strategy for Tropospheric 19 Ozone's finding that 40% or more of the ambient 20 ozone affecting New Jersey is typically the 21 result of interstate transport; 22 WHEREAS: The US Environmental Protection Agency 23 has taken final action under Section 110 of the 24 Clean Air Act to address regional ozone transport 25 in the eastern United States by requiring that 164 1 twenty-two eastern states reduce seasonal NOx 2 emissions by one third, so that power plants 3 located in those twenty-two states reach a NOx 4 emission level of 0.15 pounds per million BTU; 5 WHEREAS: The US Environmental Protection Agency's 6 Section 110 rule has been legally challenged by 7 midwest and southeast electric generating 8 companies in an attempt to stay the rule and 9 thereby delay or avoid NOx emission reduction 10 actions; 11 WHEREAS: Section 126 of the Clean Air Act 12 provides a means for states to petition the US 13 Environmental Protection Agency to take direct 14 action to mitigate interstate transport, under 15 which eight northeast states have acted; 16 WHEREAS: New Jersey has now joined the 17 aforementioned eight states to petition the US 18 Environmental Protection Agency under Section 126 19 of the Clean Air Act. 20 THEREFORE: The New Jersey Clean Air Council 21 strongly supports and commends the decision by 22 the State of New Jersey to file a Section 126 23 petition expeditiously with the US environmental 24 Protection Agency as means to ensure that the 25 impact of regional ozone transport is effectively 165 1 mitigated, should the US Environmental Protection 2 Agency be unable to proceed with Section 110 3 implementation as set forth in the Section 110 4 final rule. That's it. 5 MR. SHINN: Good. 6 MR. SPATOLA: Congratulations on behalf of 7 the entire Clean Air Council. 8 MR. BERKOWITZ: Okay. 9 MR. EGENTON: Wearing my other hat, I 10 wanted to thank you both professionally and 11 personally, as you know, the State Chamber joined 12 in the litigation with the New England States, 13 and we appreciate your efforts here today. Thank 14 you. 15 MR. BERKOWITZ: Commissioner, on behalf of 16 a lot of people who spectated your involvement, 17 and somebody that's personally involved in the 18 program years before, I'm proud of your efforts 19 in putting New Jersey on the forefront and I want 20 to personally congratulate you. We have written 21 comments which will be entered into the record 22 from Marie Curtis from the New Jersey 23 Environmental Lobby, from William Dressel from 24 the New Jersey League of Municipalities. And 25 Janelle Gurarro from Enron. Is there any other 166 1 business pending before the Clean Air Council 2 relative to the hearing? 3 MS. INDELICATO: Just to let you know there 4 was a little confusion with the BPU's scheduling 5 today. But we as the Council might want to 6 consider and we're certainly open to it if there 7 were any other questions that they were not able 8 to come to and answer or something like that, we 9 could submit them and also receive their 10 comments, so we'd like to reserve place for the 11 BPU statement also of some type. And I also just 12 want to say I have a message that was sent by 13 Chris Siebens that there were certain questions 14 he could not respond to and he'll provide an 15 e-mail address. That will come back in that will 16 make part of the record also. 17 MR. EGENTON: Erin, do we have a guest 18 speaker scheduled for the next meeting for May. 19 MS. INDELICATO: We do. 20 MR. EGENTON: I was going to suggest if not 21 that would be but the following would be we can 22 have a BPU representative come talk to us. 23 MS. INDELICATO: They filled right up. 24 MR. BERKOWITZ: I think it would be very 25 important to get the BPU's comments. 167 1 MS. INDELICATO: A representative in the 2 audience, who could really speak on the issues, 3 suggested that there were things they could have 4 answered if we would like to put certain 5 questions to them. 6 MR. EGENTON: I think in putting together 7 our reports of the comments we received, we can 8 sit down with a BPU representative and hopefully 9 in the month of June and they can clarify some 10 things on the Board of the Public Utilities end 11 of it. 12 (testimony of William Dressel, not 13 present) 14 MR. DRESSEL: The New Jersey League of 15 Municipalities is pleased to offer its position 16 regarding the environmental impact of electric 17 energy deregulation in the State of New Jersey. 18 The League recognizes that the instability of 19 market pricing and energy supply could, over 20 time, create a stronger bias toward the 21 introduction of less environmentally friendly 22 fossil fuel derived energy which is generated in 23 areas west of New Jersey. Environmental 24 standards are less in that region of the country 25 than those which have been promulgated and 168 1 successfully administered in New Jersey. 2 Therefore, the League supports any initiative 3 that will work toward the reduction of imported 4 energy to the State which has been produced 5 through unacceptable environmental standards. 6 This includes support for the environmental 7 disclosure standards promulgated under the Act. 8 However, we strongly urge the New Jersey State 9 Legislature to adopt even stronger standards over 10 the course of the next four years. We believe 11 that New Jersey should take a national leadership 12 position linking energy deregulation with 13 environmental impact concerns. Of primary 14 importance to the League is that all energy 15 consumers, particularly those in the residential 16 sector, must have the ability to benefit from 17 lower prices resulting from deregulation on a 18 consistent and ongoing basis. This will assure 19 that New Jersey will continue to maintain a 20 healthy and growing economy while its residents 21 enjoy improvement in the overall quality of life. 22 Two key issues form the League's position in this 23 critical area- municipal aggregation and the 24 adoption and administration of effective Demand 25 Side Management efficiency programs and measures. 169 1 Municipal aggregation will allow sufficient 2 numbers of low use energy consumers to take 3 advantage of volume purchasing to maximize cost 4 reductions and achieve meaningful reductions in 5 their energy bills. The league has consistently 6 and visibly maintained its support for the 7 municipal aggregation concept, and it has now 8 committed its resources to all members in their 9 efforts to develop the framework. New Jersey has 10 long been a national leader in the creation and 11 administration of highly effective DSM programs. 12 Many of these have become models for similar 13 initiatives in other states. We now find 14 ourselves at a crossroads regarding the true of 15 DSM in this state. Given the positive 16 environmental implications of DSM, it is 17 essential that a renewed effort be put forth with 18 both the energy supply sector and the private 19 energy service industry combining in a 20 broad-based effort to increase the level of 21 funding and market penetration of DSM programs. 22 DSM, by definition, will reduce the amount of 23 energy required for individuals and businesses 24 alike. This, in turn will decrease the 25 dependence on less expensive and higher polluting 170 1 electric generation. In addition, an ongoing 2 program of effective DSM efforts will ultimately 3 mitigate the need to construct additional 4 generation facilities in New Jersey or within the 5 Pennsylvania, New Jersey, Maryland 6 Interconnection. All of this will lead to a 7 substantial reduction in emissions, thereby 8 improving New Jersey's air quality. The League 9 also endorses the State's initiatives in the 10 areas of alternative and renewable energy sources 11 that are becoming increasingly critical to the 12 energy stability of both the state and nation. 13 The League expects that the increased funding 14 which was included in the legislation will be 15 utilized to develop innovative and cost effective 16 solutions to alternative energy applications that 17 will be beneficial to its membership over a 18 longer period of time. In summary, the League of 19 Municipalities has dedicated its staff and 20 resources to assure that its membership receives 21 the maximum benefit possible resulting from the 22 deregulation of the electric industry while 23 striving to support initiatives that, at the same 24 time, will lead to the amelioration of New 25 Jersey's environment. We support municipal 171 1 aggregation, the expansion of the environmental 2 portfolio standards and the development and 3 funding of effective and meaningful DSM programs. 4 Finally, we commit to provide a strong and 5 understandable education program to our 6 membership regarding the implications of energy 7 deregulation and its relationship to the 8 environment of New Jersey. 9 (testimony of Marie Curtis, not present) 10 11 MS. CURTIS: The New Jersey Environmental 12 Lobby represents some 100 local and statewide 13 environmental groups in the state with a 14 thirty-year history of activity to protect and 15 preserve New Jersey's natural resources and the 16 public health. In recent years we have focused 17 primarily on air quality because of the severity 18 of the air pollution problem in this state. We 19 fear that the deregulation of the electric power 20 industry will only worsen an already bad 21 situation. Because New Jersey is in severe 22 non-attainment of the National Ambient Air 23 Quality Standards, we have required more 24 stringent controls on pollution generators, 25 including power plants. The facilities providing 172 1 electricity in this state are far cleaner than 2 those in other areas. They also provide 3 electricity at a higher cost, paying for those 4 protections. In the midwest, the tall smoke 5 stacks carry the emissions up to the prevailing 6 winds where they are transported to the 7 northeast. Most midwestern states are in 8 compliance with NAAQS because their emissions are 9 deposited elsewhere. These states also have a 10 strong economic interest in coal as fuel since 11 they are home to much of the coal mining 12 industry. So a ready supply of rule, coupled 13 with supposed Clean Air compliance, has led to 14 dirty power production at a considerably lower 15 cost than here in New Jersey. The public has 16 been told repeatedly that deregulation means 17 competition and competition means cheaper rates. 18 Our fear is that our citizens will act on that 19 premise and decide on a power provider based 20 solely on the bottom line. This could impact 21 most adversely on our air quality, public health 22 and even on the State's economy should the clean 23 utilities be forced to curtail or close 24 operations. This is not a happy scenario for 25 anyone. We are not alone in this vision. In the 173 1 past several months, anticipating deregulation 2 and a demand for cheap power, power companies in 3 Michigan, Louisiana and Illinois have been 4 attempting to bring old, dirty coal fired plants 5 on line again. These are some of the most 6 polluting generators since they were 7 grandfathered under the original Clean Air Act 8 and exempted from new source facility standards. 9 In Michigan, the plans to reactivate such a plant 10 were called routine maintenance to justify the 11 reactivation. Some local citizens were horrified 12 and groups eventually went to court. The judge 13 declared that reactivation of a plant mothballed 14 for 12 years was more than routine maintenance an 15 ordered the generator to switch to natural gas as 16 a fuel. In other areas, the issue of those 17 dirtiest facilities being reactivated is still 18 very real and progressing. Here in New Jersey 19 our citizens will have information to assist them 20 in making a choice of power provider. The law in 21 this state requires that potential customers be 22 told of the fuel sources of the power that they 23 will be buying. Residents will be able to see 24 the percentage that comes from dirty coal, the 25 percentage that comes from cleaner natural gas or 174 1 hydroelectric, and the percentage that comes from 2 green sources like solar and wind. The choice 3 will be important to us all. If we opt for 4 monetary savings alone, our air quality will 5 continue to worsen. We are already facing 6 possible sanctions for failure to improve air 7 quality. Further stringency in our state 8 requirements will be an economic disincentive to 9 business and will end up costing us more in other 10 ways. Most important though, is the public 11 health. It is our children and senior citizens 12 who will pay the price here. Studies have shown 13 us repeatedly that air pollution equates to 14 increased heart and respiratory disease. A 15 study done here in New Jersey showed that, on 16 ozone alert days, hospital admissions for 17 respiratory disease rose roughly 30 percent. The 18 primary source of NOx, an essential element in 19 the foundation of ground level ozone, comes 20 primarily from power plants- coal burning power 21 plants. In the presence of ozone, asthma attacks 22 and allergy reactions escalate as well. A 23 British study confirmed that in the presence of 24 ozone, only one-half the normal dosage of an 25 allergen will trigger a severe attack. In some 175 1 parts of Elizabeth, NJ, roughly 40 percent of the 2 elementary school children suffer from severe 3 asthma. It is not a cost saving if we have to 4 increase medical care costs and medical insurance 5 costs to compensate for declining health. The 6 real cost of our power provider selection may 7 never be seen on an electric bill. Therefore, we 8 believe that a massive public education campaign 9 to place facts before the citizens of this state 10 prior to deregulation is necessary. New Jersey 11 citizens are sophisticated when it comes to 12 environmental concerns. We believe they will do 13 the right thing if they have all the facts. We 14 thank you for the opportunity to appear here and 15 make our concerns known to you. 16 MR. BERKOWITZ: I believe that that 17 concludes the hearing. And as such, I'll turn 18 the microphone back to the Chair. 19 MR. SPATOLA: This officially closes the 20 Clean Air Council's 1999 public hearing. And we 21 want to thank everybody for the participation and 22 the involvement and the comments and the 23 suggestions that have been made. That will help 24 us to arrive at some position on what 25 recommendations we should be making to the 176 1 Commissioners regarding this very timely issue 2 that was today's topic. And thank you. 3 - - - 4 (The public hearing was concluded at 3:30 p.m.) 5 - - - 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 177 1 C E R T I F I C A T E 2 3 I, MATTHEW SEDACCA, being a Certified Shorthand 4 Reporter of the State of New Jersey, do hereby certify 5 that the foregoing is a true and correct transcript of 6 the proceedings. 7 8 9 _______________________________ 10 MATTHEW SEDACCA CERTIFIED SHORTHAND REPORTER 11 12 13 DATED: May 2, 1999 14 15 16 This transcript is not to be copied 17 unless under the direct control and supervision of the 18 reporter. 19 20 21 RICHARD A. MERLINO & ASSOCIATES 22 7 MONTAGUE AVENUE TRENTON, NEW JERSEY 08628 23 (609) 883-7707 Fax phone: (609) 883-7713 24 25 178 1 N O T A R Y P U B L I C 2 3 4 5 I, MATTHEW SEDACCA, a Notary Public of the State 6 of New Jersey, my commission expiring on May 22, 2002, 7 do hereby certify that the witness was sworn by me on 8 the aforementioned date and place mentioned. 9 10 11 12 13 14 _____________________________ Matthew Sedacca 15 Notary Public of the State of New Jersey 16 # 2201771 My Commission Expires 5/22/02 17 Date: May 2, 1999 18 19 20 21 22 23 RICHARD A. MERLINO & ASSOCIATES 24 7 MONTAGUE AVENUE TRENTON, NEW JERSEY 08628 25 (609) 883-7707 Fax phone: (609) 883-7713