NJ Giving Up on PJM – Moves Toward Self-Sufficiency

A friend sent me this recent blog post by a Wall Street Journal reporter.  The New Jersey legislature has given up on PJM’s promises of “reliability” and has passed large subsidies to encourage the construction of new power plants in the state.  The subsidies are aimed at attracting merchant generators who will be building mainly combined cycle natural gas fired power plants.  Some of the bigger developers include LS Power and Calpine.

Calpine has filed as an intervenor in the PSC PATH case in MD and in the SCC PATH case in East VA.  LS Power is the developer of the proposed Liberty Line transmission project that could replace PATH.  LS Power was recently the victim of PJM’s rigged “analysis” performed by Burns and McDonnell, a company that already had a multi-million dollar contract on the PATH project.  Needless to say, this blatant conflict of interest resulted in the conclusion that PATH was a better project than Liberty.

The Wall Street Journal account also describes PJM’s appeal to FERC to negate the acts of a democratically elected state legislature.  This is a clear attempt by the PJM power company cartel to use federal power to attack a state’s sovereignty.

So, what will happen to PJM’s projections of “increasing demand in the eastern load zones” when NJ stops having to import PJM’s heavily subsidized coal and nuclear power from OH, WV and PA?

Gas fired power plants can be built fairly quickly.  If the subsidies go into effect in NJ this year, it is quite likely that within three years, NJ will have many of them up and running.

MD and DE have also given up on PJM’s rigged power auctions and “economic dispatch” of heavily subsidized coal power.  The MD and DE legislatures have passed laws requiring retail utilities PEPCO, Delmarva Power and BGE to enter into 10-20 year contracts to purchase power from new gas-fired and offshore wind projects to protect their investors and customers from predation by PJM’s coal-slanted “markets.”  The MD PSC has contended for years that PJM’s capacity markets cost electrical customers billions of dollars and actually suppress the construction of new power plants on the east coast.

It is clear now that states on the east coast are giving up on PJM.  The idyllic promises of deregulation have not come true for states with high energy use and little domestic generating capacity.

NJ’s apparent focus on gas fired generation has its own pitfalls.  Despite recent hype about shale gas, the longer term prospects still indicate serious depletion of North American reserves over the next 50 years.  Natural gas is relatively cheap now, but natural gas prices have always been very volatile.  While it is cleaner to burn and easier to transport than coal or uranium, gas is still a limited resource and its price will rise over time.

The only real long term solutions lie in demand reduction, through conservation and increased efficiency, and installation of wind and solar generation on a much wider scale, preferably on rooftops and backyards.  Wind turbines and solar panels require lots of fossil fuels to manufacture and transport.  We should be saving all our fossil fuels now to insure that we have the capacity to continue manufacturing these real electrical generation solutions in the future.

While the NJ legislature is wise to focus on solving NJ’s own generation shortages, legislators need to look beyond short term fossil fuels toward longer term, real solutions.

Update:  I looks like I had underestimated our friends in NJ in the post above.  I got this in an email from WV’s most knowledgeable expert on home based renewable energy: “New Jersey is known as the California of the east in terms of it’s renewable energy generation businesses.  I don’t think we have to worry about that state not getting their lions share of RE projects, they are already doing it and have the best markets for SREC anywhere in the country, they sell credits for upwards of $600/credit where most everywhere else is around $300.”  I also got this great link which describes New Jersey’s recent tax credit program for encouraging offshore wind farms as:

…leading the pack of wind-energy hopefuls, noting that the state recently  approved “one of the most aggressive pieces of offshore legislation in the country: a $100 million tax credit for offshore wind developers and supply chain manufacturers.”

Read the full article on offshore wind development here at Frank Brill’s EnviroPolitics blog.  Brill starts his piece with the following:

“European countries have put in place more than 1,000 offshore wind turbines since the early 1990s. China set up its first offshore wind farm last year, and it’s supplying power to 200,000 Shanghai households. A second plant, also in the East China Sea, will be built next year.”

That’s what Governing Magazine has to say about wind energy development abroad.

And at home?

“The U.S. has yet to build a single wind turbine in state or federal waters.”

And

Two years into a Democratic administration that promised a dramatic change in energy policy, the wind-energy industry and investors are still waiting for clear direction. And the two-and-a-half parties in Congress have demonstrated even less interest in moving the nation beyond its fossil-fuel dependence. They’re two busy bashing each other in the daily sound-bite war.

You know just how bad things are when a near bankrupt state like New Jersey has to take the lead by promising enormous tax breaks to get the turbines spinning.