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Regulators Forum: Shifting Winds, Shifting Strategies

State regulators grapple with investments, supply planning, and structural issues.

Fortnightly Magazine - November 2005

base of industrial energy users, New Jersey cannot afford dramatic rate increases.

Despite all that, the state already is almost halfway toward the goal of serving new load via more efficiency and renewables, and auditors say the state will suffer only "negligible" economic impacts by implementing its plans, according to Jeanne Fox, president of the New Jersey Board of Public Utilities. In a conversation in late September, Fox explained the state's policy priorities.

Q: What are the big issues on the BPU's agenda right now?

A: We have the Exelon/PSEG merger petition, which obviously is huge for us. But we also have the impact of increasing natural gas prices as well as other fuels. Hurricane Katrina adds to that situation, but fuels already were rising before that. As of last spring, we already had natural gas prices rise 300 percent in the past five years.

We asked companies to hedge against price increases, and 60 percent of our supply is hedged. That's good, but prices still are going up. We are contemplating whether we will allow utilities to raise rates by more than 5 percent in December and February.

I set up a task force on fuel, focusing on what we can do to help residential customers, especially lower-income people. We have a concerted effort on conservation among the lowest-income, highest-load customers that is working very well.

Q: What are your policy priorities in the long term?

A: Clean power, renewable energy and efficiency are very big priorities for us. New Jersey is one of two leading states for renewable energy. California has been at it a lot longer and has more money to put into it, but our policies are the best. We are pushing hard.

We set a goal of having 20 percent of our energy come from renewables by 2020, and 4 percent by 2008. Any increase in energy demand will be met by energy efficiency and renewable energy. We're not quite halfway there yet, but we think we can get there. Rutgers did a study for us, and said that our RPS goals through 2020 were economically feasible, and would impact electricity costs by less than 2 percent over 20 years.

We have been stressing photovoltaics (PV). At least 2 percent of our power will come from PV in the future. Four years ago there were six PV installations in the state, and now there are 750, and we have a couple of hundred applications pending. Putting in solar will reduce peak load and that will benefit everyone.

Q: Those are aggressive goals. How will the BPU help utilities achieve them?

A: We do everything with a very transparent process, with the industry involved every step of the way. It is simple and easy to understand, although there are a lot of acronyms.

Our renewable portfolio standard (RPS) is part of our basic generation service (BGS) auction. The suppliers that bid into the BGS auction have to provide renewable energy or buy renewable energy credits (RECs), which are traded using PJM's general attribute tracking (GAT) system. Suppliers are