BEFORE THE BOARD OF PUBLIC UTILITIES
PUBLIC HEARING ON THE COMPREHENSIVE RESOURCE ANALYSIS OF ENERGY PROGRAMS PURSUANT TO SECTION 12 OF THE ELECTRIC DISCOUNT AND ENERGY COMPETITION ACT OF 1999

My remarks at today's hearing continue to fervently urge this Board to roll out and fully implement a program for energy renewables and energy efficiency. In written testimony, at evidentiary and public hearings, and through documentary evidence I have stated and re-stated the Ratepayer Advocate's position in this regard. Today, in my final remarks in this proceeding, I would like to reinforce those same themes and offer some thoughts on the interim order to implement Section 12 of EDECA.

I once heard a historian say that the Stone Age didn't end for a lack of stone. It ended because technology improved to the point that stone became obsolete for many purposes. I believe that, similarly, the Fossil Fuels Age, and its concomitant pollution problems, will not end for lack of oil, coal, or natural gas. Electricity and natural gas generation technology has evolved rapidly in the past 30 years. Clean, efficient renewable technologies exist and are getting better year by year. Demand for these technologies is increasing. Clearly, the time is right for the establishment of a vibrant renewable energy marketplace together with energy efficiency.

While the Legislature recognized this fact when it approved Section 12 of EDECA, they could not envision today's crisis in energy availability and costs which would mandate immediate action by the Board. Nor could they envision possible roadblocks to success in funding and administration of the renewable energy and energy efficiency programs as proposed by the utility companies in their settlement proposals.

It is the clear policy of this state, as set forth in the Electric Discount and Energy Competition Act, to lower energy costs, provide more and better choices to energy users, and place greater reliance on competitive markets in delivering energy services, while maintaining regulatory oversight to provide appropriate consumer protections in the marketplace. It was the purpose of these proceedings to ensure that monies collected from the energy utilities' ratepayers through the Societal Benefits Charge be allocated in a manner that will advance these goals.

In order to achieve the Act's objectives of increasing consumer choice and placing greater reliance on the competitive marketplace, the Ratepayer Advocate's settlement proposal recommends that an independent statewide entity administer funding for renewable energy projects as well as energy efficiency projects. Since the renewable energy industry is only now emerging money should be placed in one renewable energy trust fund, where it will be available when appropriate programs are all in place. This is an important point, since the utilities propose that a considerable portion of the proposed renewable programs be placed under their control, as the DSM programs were. That would not only be costly to consumers, since coordination among the utilities would be costly but that would also create confusion among consumers and lead to additional expenses for the providers of renewable services. Furthermore, utility control of renewable energy funds would allow them to treat those monies as if they were an integral part of distribution utility costs of service. That would create a real potential for underspending on renewable and energy efficiency programs, despite the clear legislative mandate to use the funds in these areas. Indeed, the utility settlement proposal under-funds renewable programs for the first four years and relies on promises to make up that funding during the final years of the programs. Furthermore, many of the utilities will be offering energy services through affiliates. Utility administration of renewable funding therefore inevitably will lead to both real, as well as apparent, conflicts of interest.

For these reasons, we propose that utility administration of energy efficiency programs be phased out and placed under control of an independent statewide administrator. We believe that will result in a more competitive marketplace, with more energy efficiency choices at lower costs.

It is absurd to think that the best way to administer statewide initiatives of energy efficiency and renewable energy could be achieved by having seven separate administrators and seven separate staffs, each financially rewarded for meeting the same easily achievable goals. This fragmentation of not only administration, but potentially programming will erode the impact of energy efficiency and renewable energy programs intended by the Legislature. Anything but a single statewide administrator for all aspects of the programs will guarantee that fewer dollars will go to funding these programs and that more ratepayer funds will be funneled back to the utilities.

The utilities have proposed significant incentives for themselves as administrators of these programs. These proposed incentives would decrease the level of funding available for actual programs. Moreover it would put them in the position of judging their own effectiveness, by placing many of the evaluation measures in the utility's control. The board should reject these efforts, and mandate an independent statewide administrator, with performance incentives only for demonstrated energy savings.

Although I was pleased to see the Board's interim order mandating statewide administration of the interim funding, I am troubled that the Board has specifically left the door open to utility-based administration in its final order. I hope that it will not do so.

Finally, the board must take notice that not only have the utilities requested significant performance incentives for themselves, they are also requesting recovery of "lost revenues". Their timing for this request could not be worse. Gas companies are currently requesting unprecedented rate increases and it is anticipated that the electric companies will be asking consumers to pay for deferred energy costs once their rate caps end. Paying for lost revenues and performance incentives while consumers face a meteoric rise in rates is unconscionable.

Unfortunately, it was the lost revenue feature of the DM plans that led to greatly escalating costs on ratepayers, that will not be paid off for a long time to come. We should not repeat that mistake here. Lost revenue recovery is also not necessary because the utilities directly benefit from energy efficiency and renewable programs, by not having to expand their transmission and distribution plants for which they would not be compensated in between rate cases. The concept of lost revenues is not appropriate in a competitive environment, where the utilities through affiliates can benefit from competitive opportunities and need not rely on a rate case mentality to earn returns for their shareholders.

I was pleased, however, that the allocation of funds between energy efficiency and renewable energy programs reflects the Legislature's mandate in EDECA. I hope that the Board's final order will continue to follow the Legislature's directives and dedicate half of the $256 million collected in Societal Benefit Charges each year to these programs. Accordingly, the final order should dedicate $96 million and $32 million each year to energy efficiency and renewable energy programs, respectively, as proposed in the legislation..

Let us not make the mistakes made in California where energy conservation was not a priority of restructuring. Had energy conservation efforts been adopted six years ago the equivalent of energy from two power plants would now be available to customers and the state's energy crisis would have been far less damaging to its economy and quality of life.

We urge the Board to review the detailed and vast record generated during the nearly two years of these proceedings and to order the monies set forth under the Act be used to design energy efficiency and renewable programs that will provide state energy users with significant energy savings and will establish a vibrant renewable energy marketplace, as well as a cleaner environment for all New Jerseyans.

In a nutshell the utility proposal pretty much continues "business as usual" while the Ratepayer Advocate's proposal offers New Jersey the opportunity for development of a competitive marketplace in energy efficiency services and renewable energy technologies.

Progress always involves risk; you can't steal second base and keep your feet on first. But remember that our goals can only be reached through a plan in which we must fervently believe and upon we must vigorously act.

Thank you.

About RPA    |    Press Releases     |    Activity Report     |    E-mail Directory     |  Publications
What's New    |    Electric    |    Natural Gas     |    Telecommunications      |   Water and Wastewater      |    Links    |     Archives

HOME