All reasonable New Jerseyans, including Gov. Murphy, understand that the state must do everything it can to curb greenhouse gas emissions. In that light, the governor’s recently proposed energy plan has the right aim. A requirement, for example, for builders to take into account the impact of climate change, including rising sea levels, is a well-intentioned way to limit harmful emissions.
But as the old adage admonishes, we should measure twice before cutting. That’s because there are realities that every plan must take into account, especially when it comes to protecting energy consumers, advancing job creation, and ensuring a fair and competitive marketplace. As a former vice president of the New Jersey Business & Industry Association, I understand exactly how important those considerations are when it comes to ensuring a bright future for New Jersey.
Today, the people of New Jersey depend on natural gas to provide both electrical reliability and cost savings. Natural gas provides nearly a quarter of the state’s power and heats three quarters of the state’s homes. The electricity market that governs New Jersey, PJM, has used a boom in natural gas development to save consumers in the marketplace more than $3 billion, all while lowering harmful emissions by 30% since 2005 as a result of decreased coal use.
The unintended consequences of Murphy’s plan could be severe. First, eliminating natural gas use will saddle energy customers with higher bills and raise the cost of living across New Jersey. It will also likely hurt power reliability, which would have huge consequences for our state’s manufacturers. As someone who for years worked hand-in-hand with the businesses that employee nearly one million people in the Garden State, I can say with certainty that raising electric bills and endangering reliability is a surefire way to eliminate jobs and drive away industrial prospects.
Second, New Jerseyans are already beginning to pay heavy subsidies for nuclear and offshore wind, a situation that will only worsen under the governor’s plan. Murphy last year signed an executive order mandating 7.5 gigawatts of offshore wind by 2035, a move that means more taxpayer-funded subsidies, including for Orsted, a Norwegian company that is set to pocket roughly $1.6 billion in subsidies. On the nuclear side, the New Jersey Board of Public Utilities has awarded $300 million in subsidies to three nuclear power facilities that actually turned out to be profitable, even without the new subsidies.
State lawmakers should be mindful of advancing additional subsidies, especially in terms of taxing families and businesses with higher costs. They should also be aware of a new solution proposed by the Federal Energy Regulatory Commission (FERC) that seeks to guarantee that energy capacity markets will remain fair, even as New Jersey continues to roll out subsidies for renewables.
In a recent proposal, FERC proposed to create a level playing field for the energy marketplace by establishing new pricing rules for power providers. Under this new rule, all fuel sources would have a fair shot to bid for future energy demand in what is called the “capacity market” regardless of whether they were propped up by public subsidies. This helps ensure that sources such as natural gas, an indispensable power source for keeping the lights on, can compete fairly with nuclear plants and wind farms that receive millions in taxpayer dollars and bid for energy at an artificially low price.
The marketplace works best when there are clear rules and all parties have a fair chance to compete. FERC’s new rule helps achieve this by ensuring power providers bid for capacity energy at their true costs and fairly offset the subsidies given for preferred electricity resources. As a result, New Jersey customers will enjoy stable, affordable power prices and manufacturers will have access to the reliable power they need to keep building.
Combating climate change is a worthy goal and Murphy should be applauded for the boldness of his plan. But lawmakers must take a smart and measured approach that keeps rolling back emissions while also avoiding saddling New Jersey families and businesses with more subsidies. They should look closely at the wisdom shown in FERC’s proposal to create a fair energy marketplace and look for ways to both protect consumers and advance progress on climate change.
Frank Robinson, of Middletown, is a former vice president from the New Jersey Business & Industry Association.