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United States

Regulators hold up money for wind -- Stop-gap funding solution approved but not activated

New Jersey regulators have agreed to a $10 million stop-gap for sustainable energy, of which an estimated $2.5 million should be available for wind, solar and other green energy technologies. Oral approval for the interim fund, for energy saving measures as well as renewables, was given by the state's Board of Public Utilities (BPU) on October 10. But a fortnight later they had still not issued the formal order necessary for the money to be spent.

The BPU's inaction might be significant. A far more serious delay is the failure of the state, one of the most heavily populated in the US, to yet hammer out a way of disbursing the annual financial support for sustainability in its deregulation legislation, which includes an estimated $250 million over eight years for renewable energy projects. Its power market deregulation, launched at the beginning of the year, specified that the financial aid for renewables should be available starting in February. Indeed, ratepayers have been paying a "societal benefit charge" on consumption to pay for the aid since January.

The dispute highlights how poorly drafted deregulation legislation leads to problems when the law is implemented and, in this case, infighting between different green technologies. The law did not specify how much money would go to renewables and how it should be disbursed. One issue yet to be decided is whether the money will be distributed by each utility within its service area or by an independent administrator such as the state's Bureau of Sustainable Business.

Under the first plan, money not spent in any one year would be returned to ratepayers as a rebate, a procedure favoured by those most concerned that deregulation will lead to a rate increase for consumers. Under the second plan unspent money would accrue and be available the next year.

Industry split

Wind lobbyists are now siding with the utilities and at least one major environmental group in proposing the stop-gap fund, which appears to be a compromise to get things moving. Opposing their solution, however, are the retailer Green Mountain Energy, a wind developer in California and Pennsylvania, and several photovoltaics firms who say that the $10 million stop-gap is far too small and that $60 million would be more realistic.

"All we have in New Jersey is hot air," says John Holtz, regional representative for Green Mountain Energy. "Meanwhile in Pennsylvania, we are [close to] breaking ground on our second wind farm," he adds, referring to the active green power market in the neighbouring state and Green Mountain's plans for a second wind farm there.

So far Green Mountain is the only seller of green electricity to agree to enter New Jersey's retail electricity market. But the power marketer simply does not trust the utilities to decide which projects are worthy of support because of what it sees as a conflict of interest -- the utilities have unregulated affiliates that are in the same business. "The money would be coming in the front door and going out the back door," charges Holtz. Green Mountain is planning to install solar and hydro in New Jersey as soon as the financial support is available. It has not ruled out a wind plant.

Both sides agree that the BPU has been dragging its feet, in part for fear of controversy. They also say that the nine months of jockeying between the state's six utilities and other stakeholders, while conventional fuel costs are soaring, may be costing the state investment opportunities in renewables and energy efficiency and consumers hundreds of millions of dollars in their electricity bills. For its part, the BPU says the interim finding will allow it to see how the programs work in the short term and will help decision making in the future.

It is unclear how much large scale wind will be developed in the near future in New Jersey since the best resource is on the coast, near large population centres, and is used for recreation. "But let's hold an auction and see who applies," says Dale Bryk, an attorney with the Natural Resources Defence Council (NRDC). She says the money will flow as soon as the specifics are agreed uponEUR and as soon as the BPU acts.

California fund

Of the other states currently undergoing deregulation, both Connecticut and Massachusetts are also stumbling over how to spend public money while their electricity market is shifting from regulation to open competition, although in neither case are the issues the same as in New Jersey.

In California, the first state to start deregulation, the state energy commission has just announced the state's second auction for money from a renewables fund, which, like New Jersey's, came out of deregulation. Some $40 million will be distributed to projects to be on-line by July 1 next year. Bids are due on November 15 and awards will be announced in early December. Pennsylvania, which does not have a systems benefits charge, is being seen as a model for how to jump start green marketing because so many people are being encouraged to switch to another retailer.

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