New Jerseyans Agree on Energy Efficiency Solutions

Thanks to the leadership of Governor Murphy, the legislature, and the Board of Public Utilities (BPU), New Jersey is poised to reassert itself as a national leader on energy efficiency.
The bolden line indicates the number of states achieving or exceeding the 2% savings target New Jersey must reach.
Credit: Data Sources: 2018 ACEEE Scorecard and the Edison Foundation's 2019 "Energy Efficiency Trends in the Electric Power Industry" report.

Thanks to the leadership of Governor Murphy, the legislature, and the Board of Public Utilities (BPU), New Jersey is poised to reassert itself as a national leader on energy efficiency. After all, it’s hard to argue against delivering energy to customers in a more efficient manner while cutting costs, reducing pollution, and creating more clean energy jobs. As the Garden State implements the key energy efficiency components of the groundbreaking legislation enacted last year, public comments from 30 different New Jersey groups are in, and based on a read of those, we see a consensus emerging among environmental groups, local businesses, utilities and more: New Jersey is ready to move forward on the state’s energy efficiency goal in a way that is tailor-fit for the needs of New Jerseyans.

The shared vision calls for building on the solid groundwork that has been laid to date by the BPU and seizing the opportunity to transition to a well-coordinated portfolio of utility-administered energy efficiency programs with guidance and oversight from the state. Commenters outline suggestions for how the BPU can craft rules for energy efficiency that will save customers money and account for the many benefits of energy efficiency—saving energy, but also improving everyone’s lives by reducing pollutants that are harmful to health, making homes and buildings more comfortable, slashing emissions that cause climate change, and improving the operations of the state’s energy system.

The 300 pages of public commentary is also a testament to the enthusiasm of the community about energy efficiency and to the importance of a robust public process.

An efficiency vision for New Jersey: Let’s get it right

This round of comments was submitted to launch the implementation of the Clean Energy Act passed last spring, and the suggestions provide ways for the BPU to design an energy efficiency strategy that will fulfill New Jersey’s policy goals of tackling climate change while providing affordable, reliable energy services to customers. As explained by commenters ranging from NRDC and other environmental groups to the Energy Efficiency Alliance of New Jersey, utilities know their customer bases’ needs and have established relationships with customers. Breaking the market into smaller chunks can allow for more flexible, tailor-fit programs.

The comments make clear that for this to work, oversight and coordination led by the BPU is key, especially in navigating New Jersey through a transition phase. Steps will need to be taken to ensure that new utility programs offer customers a smooth transition with consistency with the older programs. And in addition to the BPU’s mandated role by law in reviewing the utility programs, the BPU can serve as a guide from its experiences in what has and has not worked in the state’s programs over the last few years. Ultimately, ramping up to the minimum of 2 percent annual electricity sales savings required by the Clean Energy Act from the 0.5 percent electricity consumption savings through existing energy efficiency programs in 2017 is going to be a big team effort, and everyone will have their role to play.

To keep utilities on track to achieve the maximum rather than the minimum amount of affordable energy efficiency, the BPU must revisit the incentive structures in place. As the American Council for an Energy Efficient Economy wrote, decoupling removes the disincentive to efficiency investment by severing the link between utility sales and revenues. The basic premise is simple: Why would a utility want to save more energy than it has to if it will make more money for selling more energy? Instead of this outdated model, decoupling ties revenue to saving customers money and reducing emissions associated with using more energy. It’s a win-win that’s proven successful in the top-performing energy efficiency states (and has already led to great efficiency improvements at New Jersey Natural Gas, which has a related compensation structure in place already thanks to BPU approval in 2009).

Finally, there was resounding support for ensuring that energy efficiency is compensated as a resource. In other words, recognizing in the state’s formal cost-benefit test that energy efficiency saves on the amount of energy needed, but as a result, also has a myriad of other benefits. As described by a diverse coalition of a dozen-plus businesses, manufacturers, service providers, and trade associations, energy efficiency can reduce total energy costs for customers; mitigate the impact of fuel and electricity price increases; alleviate stress on the electricity grid; reduce carbon emissions and air pollution; and build a more affordable, reliable energy system for the businesses and citizens of the state. All these benefits have a monetary value, and even if they are hard to quantify precisely, there are well-accepted national guidelines to help do so. (The results for New Jersey will be huge: a recent analysis from the regional power sector carbon reduction program the state is poised to rejoin found nearly $800 million in health benefits alone, a bulk of which from ramped up energy efficiency.)

No time (or energy) to waste: Pushing forward the process

Moving forward, it will be critical for stakeholders to come together, and for the BPU to support a process to iron out the details and resolve unknowns. From solar and offshore wind energy goals to studying energy storage options, the Clean Energy Act gave the BPU a lot to tackle and a timeline to do it on. A well-designed energy efficiency program will lessen the load on the electricity grid to allow these other clean energy resources to perform better, providing a true cornerstone to New Jersey’s clean energy future. Put another way: reducing the state’s overall energy demand through a strong energy efficiency portfolio in New Jersey’s homes and businesses will play a vital role reaching the state’s ambitious renewable energy targets at the least cost.

We already have an example of what this utility-led, state-guided process to create efficiency programs that maximizes savings and environmental/health benefits might look like, and it’s happening in the form of proposed energy efficiency programs filed by PSE&G in its “Clean Energy Future” plan. There are certainly still important details to be understood and negotiated on that proposal. However, PSE&G has outlined a range of new programs to pilot emerging technologies and better serve low-income customers, all while maintaining basic energy efficiency services and staying cost-effective—these proposals merit thoughtful consideration by BPU staff and parties engaged in that proceeding. Further, the public discussion and BPU engagement has already shown that a shift to utility-administered programs won’t be one without oversight or close examination. No one is proposing a “blank check” for utilities. Rather, NRDC and a number of other commenters are urging an orderly and managed shift to a larger role for utilities to be empowered—and not just on the hook—to deliver the energy savings required in the new law.   

Now we just need to keep working together through the stakeholder process to build on this exciting amount of agreement and get these programs – and savings – going. Doing so will set New Jersey on the path to being a leader on energy efficiency.