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New Jersey Wants Transmission and Renewables, But at What Cost?

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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.  #  #  #

David Gaier's picture

Thank David for the Post!

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Discussions

Bob Meinetz's picture
Bob Meinetz on Jun 9, 2020 11:08 pm GMT

David, there is no cleaner source of electricity than nuclear energy. Why would anyone exclude it from New Jersey's clean energy future?

2018 legislation authorizing New Jersey's Zero Emission Credit correctly noted that

  • "Nuclear power generation is a critical component of the State’s clean energy portfolio because nuclear power plants do not emit carbon dioxide, other greenhouse gases, or other pollutants; in addition, nuclear power is an important element of a diverse energy generation portfolio that currently meets approximately 40 percent of New Jersey’s electric power needs.
  • Several of the existing, licensed, and operating nuclear power plants within and outside the State that currently provide electricity to customers in New Jersey are at risk of abrupt retirement due to a variety of factors.
  • The retirement of nuclear power generation will inevitably result in an immediate increase in air emissions within New Jersey due to increased reliance on natural gas-fired generation and coal-fired generation."

New Jersey's Renewables Portfolio Standard, which had excluded nuclear energy, will cost ratepayers $1.05 billion in 2021 - three times as much as nuclear - for intermittent energy that requires backup with fossil fuel gas and/or coal.

The Economic Impact of New Jersey's Renewable Portfolio Standard

David Gaier's picture
David Gaier on Jun 10, 2020 12:59 pm GMT

Bob, the intent of the article wasn't to deal with generation specifically, it's mostly about transmission. And I grew up in Piqua, Ohio, a small town that had the first municipal power system reactor in the country, of which I was very proud as a kid. I do support nuclear--with conditions--but I'm moving in the direction of SMRs: And Look at Vogtle, V.C. Summer, and Fukushima for that matter. And we (the federal government) still haven't come up with a place and a process to safely store nuclear waste. So we have a ways to go:  ANOTHER CHALLENGE FOR NUCLEAR STORAGE SITE

 

Bob Meinetz's picture
Bob Meinetz on Jun 10, 2020 6:05 pm GMT

David, "Will the Garden State Get Greener? And at What Cost?" has everything to do with generation. Transmission wastes 7-9% of electricity on any grid, whether it's powered by nuclear plants or solar farms.

"And Look at Vogtle, V.C. Summer, and Fukushima for that matter...."

New Jersey isn't building a new nuclear plant and is thousands of miles away from a sizeable earthquake fault.

"...and we (the federal government) still haven't come up with a place and a process to safely store nuclear waste."

Nuclear waste has been stored safely for half a century.

"...ANOTHER CHALLENGE FOR NUCLEAR STORAGE SITE..."

The only challenge for Holtec is having the hysterical allegations of Helen Caldicott and her Beyond Nuclear activist group dismissed as promptly as possible in court.

Caldicott has made a cottage industry out of stalling nuclear projects on the flimsiest of pretenses (including both Vogtle and V.C. Summer). The fearmongering that drives Beyond Nuclear's ongoing support has become more of a roadblock to climate action than climate change denial.

 

Howard Smith's picture
Howard Smith on Jun 14, 2020 11:35 pm GMT

With the challenges in ROW expansion and acquisition, any new infrastructure will be problematic and with the expected intervention, timing to build the needed facilities may exceed the required completion date.  The planning cycle needs to be pushed back by several years to accommodate this need for additional timing.  Also, the integration of DERs on the T&D system will fundamentally change the flow patterns on the grid and will have unexpected consequences that have not been studied or seen before.  Therefore, more proactive studies that look beyond the traditional steady-state analysis, particularly on the distribution system will need to be performed.  These dynamic and stability studies will require new levels of data both from in front of and behind the meter.  This will include more percise customer load data - not just net loads.  This will be especially true as mobile loads such as EVs, storage, and dispatchable loads such as AC and electric hot water heaters are utilizied. 

There also is the state versus FERC jurisdictional issues that are in play now that may have significant implications on the plans and outcomes of all these discussions.  Should FERC win and excert their control, then all bets are off the table as related to individual state mandated programs.

David Gaier's picture
David Gaier on Jun 15, 2020 5:24 pm GMT

Indeed, Howard.  At a previous position I also went through a ROW / easement battle for a couple of buried gas pipelines; they were a nightmare and we ultimately abandoned both projects. People want immediate, unlimited, and inexpensive access to energy but without any personal inconvenience, pollution or infringement of their property or viewscape. 

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