Summary and Commentary of the 2011 Energy Master Plan Draft:

In June 2011, the Christie Administration released a draft of its Energy Master Plan which is a strategic vision for the use, management, and development of energy in New Jersey over the next decade. State Law requires that the Energy Master Plan be re-evaluated every three years, despite its effective scope of 10 years. This 141 page report for 2011 includes both a long term component as well as the short term steps needed to get there.

Ultimately, any master plan is about improving the quality of life for the citizens of New Jersey and maintaining an optimal balance between, economy, reliability and environmental preservation. It is therefore instructive to look at some of the evaluations of the state in relation to the country as a whole, by the Center for Enterprise Development in its 20 year report in 2007).

New Jersey’s ranking by the CFED:
Overall, the Center for Enterprise Development gives New Jersey a D and ranks it 44th in its Development Capacity Index. That is definitely bad news and probably stems from the state’s aging infrastructure, population density (#1 in the US), urban sprawl and the relatively high degree of regulation that such populations seem to indicate.

One of the key impediments to development is the cost of electricity in New Jersey. As of October 2010, the Garden State had the fourth highest prices for residential usage and the seventh highest prices (nationally) for commercial/industrial use.

New Jersey gets its power from the PJM Grid (Pennsylvania, Jersey, Maryland Grid). Four of the highest-priced of the 16 PJM localities are located in New Jersey, and are the franchised service areas of PSE&G, JCP&L, ACE, and RECO. Transmission constraints across the region limit the extent to which energy can flow from one area to another. These transmission limitations coupled with PJM operating criteria result in energy price separation – prices are typically higher in New Jersey than in adjoining areas due to the State’s high demand and higher cost generation available to serve load.

When it comes to energy consumption the picture in New Jersey is also noteworthy. New Jersey in 2007 (in comparison to its fellow states) was ranked 12th in terms of power consumption and pollution. When it comes to renewable energy policy the state does better and is ranked 8th in the nation,

Given that New Jersey has the highest per capita income in the country; it follows that the average New Jersey home would use more electricity. The Dept of Energy estimates that the average NJ home uses 700 kWh/month of electricity. This level consumption has resulted in NJ having to import 30% of its power needs from out of the state. This aspect too contributes to higher transmission costs for power in New Jersey.

New Jersey’s Solar Energy Profile:

Despite its relatively low cost effectiveness, New Jersey is second only to California in installed solar capacity, some 9,000 solar energy projects in the US now account for some 330.5 MW statewide. These have been funded by various subsidy programs run by the state that are in turn funded by all ratepayers through provisions like the Solar Incentive Program, which requires the state’s utilities to produce or purchase “Solar Renewable Energy Certificates.”

In some cases this has led to utility companies footing the bill for the installation of solar facilities on private properties so that they could get credit for a portion of the output! New Jersey’s SREC price is at or close to the price for their “Solar Alternative Compensation Payment” which is currently the highest in the nation and therefore yet another incentive for individuals and corporations to build solar projects.

The Christie administration is expected to reduce payments like the “Solar Incentive Program” as it is not in favor of transferring these costs to all power consumers.

Another method of funding alternative energy costs has been the “Societal Benefits Charge” which for residential consumers is a 3.6% surcharge on electricity bills. Some 62 %of the average electricity bill pertains to electricity supply (the component that is deregulated). The Christy administration is looking at ways to do away with this charge. Special energy projects undertaken by residential consumers, corporations and municipalities are sometimes financed by drawing on this fund.

The state has refused to use dirty energy from coal going forward and is working towards ensuring that at least 22.5% of all energy generation is from clean energy sources by 2021. Further the goal is to have 70% of the state’s electricity from clean sources by 2050.
This according to the plan is a tall order because the solar and wind energy resources in the state have been deemed by experts to be too intermittent. It may be more feasible if nuclear and gas powered electricity are classified as clean.

Power Practices that are Cost Effective and Efficient:
This management process described in the draft Energy Master Plan is aimed at:
-    Saving money or driving down the cost of energy
-    Reward energy conservation and efficiency, especially as it relates to peak consumption.
-    Continuing a policy of growing investment and employment in clean and renewable energy

The plan also seeks to mitigate the long term cumulative impact of usage growth.
Overall over the last 20 years the state has moved away from carbon based power generation from Coal and Oil to more Gas and Nuclear Power. This has resulted in cleaner generation with 50% of generation capacity coming from nuclear power and over 35% coming from natural gas.

Other Technologies targeted at efficiency that are being planned for:

Better Use of Energy Storage Opportunities: These technologies include:
o    Compressed Air Energy Storage
o    Flywheels
o    Advanced Battery Systems and
o    Plug in Hybrid Energy Vehicles

-    A demonstration project is being planned to evaluate Smart Grid Technology
-    Dynamic Pricing and Smart Meters: As the use of smart meters is phased in, New Jersey power consumers will have a greater opportunity to take advantage of “dynamic pricing”

Opportunity for Energy Management Firms:
In addition to existing programs, the State will take advantage of recent legislation that allows State agencies to contract with third parties with “know-how” and financial resources to implement and fund energy efficiency measures in government owned and/or operated buildings without upfront capital investment.
 
Operating costs will be lowered by using performance-based contracting for capital improvements to energy equipment such as lighting upgrades, heating, ventilation and air conditioning (HVAC) replacement, and the installation of building automation systems.

Salutary Effect on Employment:
The drive to grow the economy will also require, increasing the production and cost of energy, and the creation of green energy jobs. The plan is also recognition of how vital energy policy and infrastructure is to New Jersey’s development.

Contents of the Energy Master Plan (Draft):
Section 3 describes the energy management process. Sections 4 & 5 provide the background on New Jersey’s electricity and fuel centers.
Section 6 summaries the legislation that has been passed in support of energy policy since the last energy management plan published in 2008.
The policy recommendations of the report are divided into four sections:

Section 7.1. Deals with the state’s challenges concerning conventional generation and other infrastructural resources.

Section 7.2: Studies the expansion of the states renewable resources while justifying the incentives provided for renewal energy development.

Section 7.3.: Addresses energy efficiency, conservation & demand response.

Section 7.4: Discusses innovative technology opportunities

Key Issues for the Future:
The high cost of energy in New Jersey is a significant threat to the states competitiveness in relation to the nation and other states in the north east as well.

Some programs have been put in place to reverse this trend (like encouraging and incentivizing companies to invest in higher efficiency equipment, funding solar power projects, promoting conservation etc).

Overall however these high costs are unfortunately likely to continue in the future. There appears to be little substantive thinking that is likely to reverse this trend.

The high costs are determined by a combination the following factors:
-    More consumption of energy than production.
-    Transmission bottle necks (a transmission line to remedy this problem has been delayed and is currently expected to be available only around 2014.
-    Relatively higher regulatory bottle necks
-    The growing cost use and cost of natural gas
-    The price pressure brought about by phasing out dirty and inefficient generating resources.
-    The imminent retirement of the nation’s oldest nuclear plant (Oyster Creek) in 2019.
-    Continuing consumption growth from higher concentrations of computers, plasma TVs, etc.

Governor Christie talks about transferring power to the people of New Jersey. He is taking small steps towards reducing price pressure by providing incentives to upgrade technology, use less/off-peak energy. He is also encouraging programs to use less energy.

There are some things he could do more aggressively, such as supporting the conversion of brownfield sites into solar projects and accelerating the use of wind energy offshore.

The prognosis for actually streamlining power generation and cost reduction in New Jersey are still grim despite this draft of Christie\'s144 page Energy Master Plan.

 Power to the people is truly what New Jersey needs!

The full text of the NJ Energy Master Plan Draft can be read here:
http://www.state.nj.us/emp/docs/pdf/2011%20Draft%20Energy%20Master%20Plan.pdf