BY HAND DELIVERY                                        December 15, 2000

 

Frances L. Smith, Secretary
Board of Public Utilities
Two Gateway Center
Newark, NJ 07102

Re:	I/M/O the Filings of the Comprehensive Resource Analysis of Energy Programs Pursuant to Section 12 of the Electric Discount and Energy Competition Act of 1999 BPU Dkt. Nos: EX99050347, EO99050348, EO99050349, EO99050350, EO99050351, GO99050352, GO99050353 and GO99050354

              

 Dear Secretary Smith:

            Pursuant to your letter dated December 6, 2000 in the above-referenced matters, the Division of the Ratepayer Advocate (Ratepayer Advocate) submits these comments to the Board of Public Utilities (Board or BPU) on the redacted report from the New Jersey Department of Environmental Protection (NJDEP or Department), received by this office on December 8, 2000.  Enclosed are an original plus eleven copies of the comments.  Kindly stamp one of the copies as “filed” and return it with the messenger.  Thank you for your assistance.

            The Ratepayer Advocate notes for the record that the material received by this office contains a report from Gary Sondermeyer, Chief of Staff of the NJDEP, submitted to John Valeri, Chief of Staff of the BPU, under cover letter dated June 22, 2000 (Report).  The cover letter states that this report is in the nature of an evaluation of the settlement offers provided by both the Utilities and Non-Utilities [1] in this proceeding, with the objective “to provide the Board with the Department’s environmental assessment of both the Utilities and Non-Utilities energy efficiency and renewable energy program settlement proposals and our recommendations, from an environmental aspect, between the settlement offers.”  Before its release and in an unusual procedure, the June 22, 2000 report was heavily redacted by the Board, and not by the author of the report, the NJDEP itself, for reasons of confidentiality.  The December 6, 2000 Secretary’s letter cites the “deliberative process privilege” as justification for the redactions.  Presumably, the deliberative process that is to remain undisclosed is that of the Board and not of the NJDEP, which apparently did not require the redactions itself.

             Additionally, the material contains a cover letter dated January 21, 2000 addressed to Herbert H. Tate, President of the BPU, from Robert C. Shinn, Jr., Commissioner of the NJDEP.  The letter states that attached to it were recommendations developed by the NJDEP “with respect to the Board’s implementation of the societal benefits charge [SBC] funding.”  None of those attachments seem to have been included in the material received by this office.  Our comments, of necessity, are therefore confined to the heavily redacted June 22, 2000 report.  The Ratepayer Advocate requests to be provided with a copy of the January 21, 2000 NJDEP report and any other reports by the NJDEP to the BPU pertaining to these proceedings.  The Ratepayer Advocate also reserves our legal rights to object to the redaction of these documents, since the Board has yet to issue a written order explaining the Board’s action and the necessity for any redactions. [2]   If there are issues of confidentiality, the Ratepayer Advocate is of course ready to file a confidentiality agreement as it does in all cases where confidentiality is mandated.

            Because of the extensive redaction of the June 22, 2000 report, the Ratepayer Advocate’s ability to comment is severely constrained.  However, from the NJDEP material provided to the Board, it is apparent, despite the redactions in that material, that the NJDEP carefully scrutinized the two pending Comprehensive Resource Analysis (CRA) settlements in the light of its statutory responsibilities and its related work on the environmental impacts of energy systems.  It appears that the NJDEP’s materials constitute a positive contribution that can assist the Board in arriving at a fully informed determination on the pending settlements.  All parties to this proceeding should have the benefit of these determinations.

Initially, the NJDEP repeatedly observes that environmental benefits are positively correlated with funding levels for energy efficiency and renewable energy.  The agency states at the outset that in assessing environmental benefits of avoided emissions, “it is the total amount of funding during the CRA period that is the determinate factor.”  Report, p. 1.

Additionally, the NJDEP observes that renewable energy provides great environmental benefits.  When reviewing the allocation of funds between the energy efficiency (EE) programs and renewable energy (RE) programs, the NJDEP states that:

                        from an environmental aspect, the greatest environmental benefit occurs by displacing a ton of conventionally generated power first by power generated from renewable energy technologies and then using that power efficiently.  This will substantially reduce emission and other environmental impacts over front loading the SBC funding beyond the legislative allocation with just energy efficiency programs.

 

Report, p. 3.  This is consistent with the Non-Utilities’ position that supports full funding for RE projects for the entire four-year CRA period, pursuant to the requirement of EDECA.

            The Ratepayer Advocate agrees with these factual assertions. They imply that, from an environmental perspective, new CRA programs should be funded at no less than a full $128 million per year level, with the full statutory 25% of funds allocated to renewable energy.

            However, there are some factual assertions in the NJDEP materials that have been released that the Ratepayer Advocate believes are incorrect or incomplete.  Discussion of these follows.

Energy efficiency funding by sector

In addressing EE funding, the NJDEP states that only 11% of the environmental benefits identified in its analysis come from the residential sector.  However, the NJDEP’s analysis did not include many of the EE measures identified in both the Utilities settlement and the Non-utilities settlement.  These additional EE measures also reduce air pollutants and greenhouse gas emissions.  Therefore, the NJDEP’s work cannot provide a basis for any allocation of EE funding to the residential sector that falls below the lower of the levels in the two settlements.  The Board also must bear in mind that, beyond environmental considerations, there is an equity consideration arising from the fact that recent DSM expenditures have tended to fall below residential energy sales on a proportional basis.

Differences in energy efficiency programs

The NJDEP states that the difference in programs between the two settlement proposals is “small.”  Report, p. 5.  The Ratepayer Advocate would point out that the “pay-for-savings” approach, which accounts for about half of the nonresidential EE budget recommended in the Non-utilities settlement, is not present in the Utilities settlement.  This “pay-for-savings” approach is particularly well suited to near-term retrofit projects in existing facilities, so that environmental benefits would accrue rapidly.

Differences in renewable energy programs

The NJDEP states that RE program designs are “very similar” between the two settlement proposals.  Report, p. 9.  The Ratepayer Advocate agrees that there are similarities.  However, one of the significant differences is in the Non-utilities’ emerging technology buy-down program.  That buy-down program is structured so that, if the Board should decide to include natural gas fuel cells under the RE programs, gas-fed fuel cells would receive smaller incentives than fuel cells that are fed by renewable energy sources.

The NJDEP argues in favor of gas-fired fuel cells due to their emissions benefits.  The Ratepayer Advocate agrees that natural gas fuel cells have emissions benefits and we do not oppose their development.  However, natural gas is a fossil fuel and finite in quantity, i.e., it is not renewable.  Therefore, a technology that fosters the increased use of fossil fuels does not properly belong in a program that is intended to encourage the growth of renewable energy technologies.  Funding for gas-fed fuel cells may more properly belong elsewhere in New Jersey’s EE and RE priorities.

The Ratepayer Advocate did not see, in the NJDEP material that was available for review, acknowledgment of the significant point that, under the Non-utilities settlement, all RE funding would be collected from electric ratepayers only and not gas ratepayers.  Since promotion of natural gas fuel cells is more in the business interests of gas utilities and their affiliates than electric utilities, it is inappropriate to require electric ratepayers to provide funding for projects that promote natural gas consumption.  Also, though there may be some possible electric distribution system benefits from promotion of natural gas fuel cells, those benefits are more properly funded by other means than a nonbypassable charge on utility customers only.

The NJDEP states that there is no reason for the size limitation on renewable resources in the Non-utilities settlement.  The Ratepayer Advocate respectfully disagrees.  There is a reason.  That reason is the need to focus a portion of the funding on smaller size emerging technologies that are less market-ready at present.  The renewable energy portfolio standard (RPS) applicable to electricity suppliers will lead them to turn first to those renewable resources that are lower in cost.  Renewables that are relatively lower in cost should not be unnecessarily subsidized by the CRA funding.

The NJDEP states that smaller landfill gas to energy facilities are not market-ready and thus potentially deserve CRA support.  The Ratepayer Advocate respectfully disagrees.  Here again, the effects of a strong RPS must be considered.  Incremental landfill gas projects are more likely to be developed pursuant to the RPS than are the technologies included in the Non-utilities settlement.  The NJDEP’s “cost for power” estimates show that landfill gas is the lowest in cost of all renewable resources. Finally, the Ratepayer Advocate notes that the Utilities settlement also excludes landfill gas to energy projects.

            The Ratepayer Advocate submits these comments on the redacted NJDEP report for the Board’s consideration in crafting the best EE and RE programs for the future.  However, the Ratepayer Advocate respectfully requests that the Board also quickly issue its written order containing the reasons for the redactions, so that we may consider what actions, if any, are necessary in light of that order, including objections to the redactions and requesting an unredacted copy.  The Ratepayer Advocate also reiterates our request for a copy of the January 21, 2000 NJDEP report and any other NJDEP reports the Board has received in connection with the CRA proceeding.

Respectfully submitted, BLOSSOM A. PERETZ, ESQ. RATEPAYER ADVOCATE

                                                                                              
                                                         

 

On the brief:

Nusha Wyner
Badrhn M. Ubushin
Gregory Eisenstark

c:	President Herbert H. Tate Commissioner Carmen J. Armenti Commissioner Frederick F. Butler John Valeri, Chief of Staff Alyssa Weinberger, Executive Director  Service List (by hand delivery or regular mail)

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