New Jersey Wants Transmission and Renewables, But at What Cost?
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- Jun 9, 2020 9:30 pm GMT
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Stefanie Brand, Director of the Division of Rate Counsel, is a tireless advocate for New Jersey’s ratepayers. Her tenacity in opposing blanket subsidies to generators, or tacking on an additional charge per MwH to meet a target price, such as ZECs (Zero-emission Credits), then passed on to every customer—residential, commercial, and industrial—is almost legendary. And she’s no different when looking at the burgeoning costs of transmission in the state, including upgrading the state’s existing aging conductors, replacing lines that can’t be fixed, and adding capacity to accommodate the expected expansion of utility-scale renewables, particularly offshore wind, which currently is being planned and funded in NJ and a number of northeast state capitals, particularly New York, Maine, Maryland, and Massachusetts.
Currently, the only operational offshore wind park in US or state waters is the relatively tiny demonstration Block Island Project (30 MW) off Rhode Island. While the capacity of direct-drive turbines continues to rise (e.g. GE’s Haliade-X 12 MW, Vestas’ 10 MW, and Siemens Gamesa’s 14 MW unit!) and come online, the EIA’s (as well as other well-researched and reviewed sources) projected Levelized Cost of Energy, Avoided Cost of Energy, and their ratios still make offshore wind still relatively expensive, and at the same time, non-dispatchable generation. Nonetheless, global warming, climate change, recurring 1000-year storms, and the collapsing economics and end-of-life limits of coal plants will continue to push OSW forward, in concert with aggressive state OSW goals and Renewable Portfolio Standards.
But let’s go back to New Jersey’s transmission lines and projects, and NJ’s Board of Public Utilities, which is taking a hard look at what’s been described as the “spiraling” costs of upgrading transmission infrastructure in the state, some projects of which have been described as superfluous, and the costs then rate-based and passed along to consumers. As renewables grow in New Jersey, a state known for its aggressive solar program and often rollercoaster ride of SREC pricing, it appears that NJ BPU is looking closely at what’s really necessary, what these projects may cost, and how necessary they really are, at least for the foreseeable future when large wind parks are still offshore in the figurative sense.
To be sure, some of these transmission projects such as PSE&G’s upgrades from 26kV to 69kv are legitimately driven by load growth, and needed to reliably serve hundreds of New Jersey communities. This project includes Gas-Insulated Switchgear (GIS) and Supervisory Control and Data Acquisition (SCADA) systems in certain locations. At the same time, some of these ostensibly urgent upgrades are “stridently” opposed in places such as the tony Boro of Westfield, to which PSE&G has already labored to put forth three different upgrade routes and plans. Such relatively small upgrades in individual towns—though large in the aggregate—pale in comparison to major undertakings such as the Metuchen-Trenton-Burlington project, a $739 million undertaking that will upgrade 138kV circuits with 230kVcircuits between the PSE&G Metuchen Switching Station in Edison and the PSE&G Burlington Switching Station in Burlington, and which has been blessed by the PJM Independent System Operator.
In February 2020, NJBPU approved state’s 19th annual electricity auction for Basic Generation Service (BGS), resulting in slightly higher costs for electricity in all regions of New Jersey with the exception of customers of Rockland County Electric. These increases were generally attributed to transmission upgrades and projects. But a separate transmission-related issue may prove to be more painful for New Jersey ratepayers, based on last year’s rejection by FERC of a rehearing request by New Jersey regulators regarding costs allocated to the state from a transmission line that delivers power from the state’s three nuclear plants to Delaware and Maryland. NJ BPU President Joseph Fiordaliso decried this as an unfair cost placed on NJ ratepayers when the beneficiaries are all out-of-state. Rate Counsel Stefanie Brand, who joined the BPU in seeking a rehearing on the disputed allocation of costs, echoed Fiordaliso’s unhappiness.
For its part, PSE&G, the state’s largest utility, had already been subjected to criticism from Brand, the New Jersey Industry Association, and competitive generators for its successful attempt to receive ZECs for its Hope Creek and Salem 1 and 2 nuclear units, which could approach $300 million each year. And Ms. Brand is contesting the ZECs in New Jersey Appellate Court. PSE&G at the same time opposed the allocation of the transmission costs to New Jersey ratepayers to send that nuclear energy south to Maryland and Delaware.
As New Jersey continues its march to a clean energy future based on extremely aggressive renewable portfolio goals, transmission proposals will continue to emerge that will inevitably raise ratepayer costs. While some of these costs may be offset by improvements in energy efficiency, Brand thinks they will add up over time, and the incredibly high cost-of-living in the Garden State will continue to rise. As the #1 state in the union for residents decamping for cheaper environs, it’s something that the folks in Trenton should be thinking about. # # #