The Star-Ledger

Governor Argues For N.J. Power Authority

State sees more juice, lower bills

The Star-Ledger — Wednesday, October 10, 2007

BY TOM JOHNSON
Star-Ledger Staff

The Corzine administration wants to create a state-run authority that would develop additional power plants in New Jersey, a step that officials believe would boost the supply of electricity in the state and lead to lower electric bills for consumers and businesses.

The concept of creating a public power authority, similar to one that has long been in place in New York, is emerging as one of the key – and potentially most controversial – recommendations in an energy master plan being developed by the administration. The master plan, including the proposal for a state power authority, is expected to be completed next month.

The proposed agency would have the authority to acquire development sites, including mothballed former power plants, and work in partnership with private industry to build large generating stations, according to a draft of a portion of the master plan obtained by The Star-Ledger.

"The arguments for a New Jersey power authority are compelling," the draft document says. Such an authority could help resolve the state's shortage of power plants, introduce competition to existing power generators, and develop renewable energy sources such as solar and wind power as well as conservation projects, according to the plan.

If adopted by the administration, the power authority would tackle two critical problems that arose from the break-up of New Jersey's electric monopolies nearly a decade ago: the steady rise in power prices, which has led to double-digit increases in electric bills the past few years, and the lack of new power plants in a state where demand for electricity is growing at three times the rate of population growth.

The proposal is likely to draw intense opposition from Public Service Enterprise Group, the region's largest energy company, and other power suppliers, which have seen their profits swell because of tight energy supplies and growing demand for electricity. New entrants in the market could lead to lower power prices.

Paul Rosengren, a spokesman for the company, said it has not seen a draft of the plan. "If a power authority is proposed, it is essential that it be structured in a way that helps New Jersey effectively meet our carbon reduction targets without disrupting competitive markets," he said.

Other business and manufacturing interests likely will line up to support the proposal.

"Anything the administration does to encourage new generation – whether it is solar, wind or new electrical generation – is good," said Hal Bozarth, a lobbyist for the Chemistry Industry Council of New Jersey. "If we expect New Jersey's economy to rebound, we've got to bring the cost of energy down."

The governor's office would not talk about the specifics of the plan.

"The plan is a work in progress," said Lilo Stanton, a spokeswoman for the governor. "It's premature to comment at this point."

Developing power plants with the backing of the state would be less risky, and therefore cheaper to finance, than facilities built by independent suppliers, the plan argues. Lower investment costs should translate into lower electric bills for customers and businesses alike, the plan says.

A power authority also is viewed by state officials as a way to increase New Jersey's energy independence, according to three people briefed on the plan. They asked not to be identified because the plan is still being formulated.

"I applaud the Corzine administration for its vision in helping to resolve critical energy issues currently facing the state," said Steven Goldenberg, a lawyer representing manufacturing interests.

It is a step that other states are taking as deregulation of the energy business has led to spikes in utility bills. "This seems to be part of a trend around the country, where we have seen more and more apprehension among officials on relying on competitive market structures," said Paul Patterson, an energy analyst for Glenrock Asssociates, a research firm in New York.

Connecticut and Illinois are considering setting up power authorities. New York's power authority was created when Franklin Delano Roosevelt was governor.

Beyond opposition from industry rivals, there are bound to be questions about how such a venture would be financed and whether a new authority would plunge the state further into debt, especially when it faces steep costs for rebuilding aging bridges and roads and urban schools. The draft plan does not detail how much money it would cost to set up an authority or where the funds would come from.

The state currently has 10 major power plants, which produce more than three-quarters of the electricity generated in New Jersey. Most of the baseload plants, including three nuclear units, are operated by PSEG.

The draft plan anticipates the state will need two new baseload power plants to meet its energy needs. One of those plants may include PSEG's plans to add another unit at its nuclear power station in Salem County, where it already operates three units.

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