On behalf of the New Jersey Business & Industry Association, the state’s largest association representing the job creators in our state, I offer the following comments on Assembly Bill No. 6154, which would establish an advanced nuclear energy program.
While NJBIA has been a strong supporter of nuclear energy in our state, and we would welcome new nuclear facilities to be located in New Jersey to meet our growing need for more electrical power, we cannot support this legislation at this time. While the bill addresses the need for more electrical generation by calling for the development of a new, advanced nuclear facility, it is premature to take that step. In our testimony, we will explain our concerns and present a more comprehensive plan that should be pursued in place of this legislation.
Before we take definitive steps to build a new nuclear facility, we need to reexamine our complete energy system. Unfortunately, the policies of the last eight years have turned New Jersey into an electric energy importer where previously we generated sufficient capacity to export to others. Closing existing generation while promoting electrification policies has led, along with poor management by the PJM and the demand growth by AI and data centers, to unprecedented increases in electric bills. Unfortunately, we can only see those rates increasing in the near term unless a significant change in policy is implemented.
Before we deem that nuclear power is the answer to our longer-term energy needs, and it very well may be, we need to produce a real Energy Master Plan, based on realistic projections and that holds affordability and reliability as the tenants of sound policy. Of course, we must also pursue policies that decarbonize our grid, but we should not do so by the creation of artificial and unrealistic goals and deadlines. Rather, we should implement policies that favor “no regrets” actions and that facilitate technological innovation.
The following six policies should be the basis for a new energy policy for the State:
- Develop a new, realistic Energy Master Plan based on low-cost, reliable energy, and the consideration of the best of all available energy sources;
- Set procedures that accurately measure demand, especially for new, large capacity facilities;
- Upgrade the transmission and distribution grids;
- Enact permitting reform at the PJM, state, and local levels;
- Focus on measures to lower energy costs, including using the Clean Energy Fund to upgrade transmission and distribution facilities; and
- Encourage the upgrade, expansion, and development of new natural gas electric generation.
First Things First: A New Energy Master Plan – Before we pick winners and losers from a generation standpoint, we need to do an analysis of our energy needs, project demand into the future, understand our existing capacity and generation deficit, and consider all alternatives to meet that deficit in the most cost-effective and reliable manner possible. We need to fully understand all costs, who will pay, and what the rate impacts will be before we make decisions. All of this information should be developed in an open, public process and the results made public in a transparent manner.
We need to make decisions based on the best of all the above approach, and this includes not only nuclear, but renewables, natural gas, geothermal, and other measures that can increase generation, reduce demand, and lower carbon emissions.
Determining Demand – While we encourage the continuation of the growth of electric vehicles and efforts to reduce energy consumption and carbon emissions from the building and industrial sectors, we should not compel electrification policies, especially while we have a capacity deficit. Rather, by developing technologies, providing limited and targeted incentives where necessary, and providing education of options, we can and will continue to reduce our carbon emissions, as we have been doing steadily for the past 20 years.
More specifically, as it relates to new demand from data centers, we support the following:
- Pass legislation and encourage other states in the PJM region to do so as well, to ensure that large-capacity users seeking to connect to the grid are projects that are very likely to be built if approved. We need to better determine which projected projects are real and which are not;
- Require that large-capacity users can ensure that there is sufficient electrical generation on the grid, or available to the user, to meet their needs without impacting the reliability of the grid. This assurance can come in the form of a determination that the capacity exists on the grid at the intended location of the facility, or the user can demonstrate that they have contracted for or will build the necessary electrical generation. We should not try to dictate the power source for this electric generation.
Upgrade the Grid – We need to take upgrading our transmission and distribution grids seriously and, as necessary, provide the resources to do so. The inadequacies of the distribution grid are partly to blame for our inability to connect many solar projects which could help increase generation capacity. Grid enhancements could also help prevent electricity losses during transmission and provide resiliency and security. While the private sector has been charged with investing in grid enhancements, government investment can help accelerate and encourage these investments and keep costs down for ratepayers. At the least, PJM and its members and member states need to identify where grid upgrades are needed and facilitate, encourage, or invest in those upgrades.
- Toward that end we support using upward of $300 million or more annually from the Clean Energy Fund, which is funded by the societal benefits charge imposed on ratepayers. While this money currently goes to a number of purposes, some of which needs to continue, such as low-income assistance, much of these revenues would be better spent by investing in grid upgrades.
Permitting Reform – Permits for new generation take too long under existing paradigms. This needs to change in order to bring new generation online as quickly as possible and at the least cost. We would recommend that a new “Electric and Energy Generation Permitting Group” be created which would have the legal authority to issue approvals at the state level. This group should be staffed by DEP, DCA, and other appropriate employees who have the knowledge, experience, and legal authority to issue permits and approvals. This group shall expedite all reviews and approvals needed to construct new energy generation.
Because many permits and approvals are required at the local level, the Legislature should consider deeming these projects as “beneficial uses” for the purposes of the Municipal Land Use Law and should adopt other necessary changes to the law to allow these projects to be expedited.
Because the environmental justice regulations may substantially delay energy expansion projects and may require a denial of new generation, an analysis should be made if it is possible to facilitate projects in this process while still maintaining the communications and protections that law was established to implement. As an alternative, the State should study areas where electric generation units (EGUs), can be sited.
Finally, PJM needs to further study and modify its connection policies so that generation can be connected to the grid in a more expeditious manner.
Lowering Cost – Increased in-state generation capacity should have the effect of leading to lower costs due to capacity and transmission charges. To further reduce costs, we recommend the following:
- Withdraw from RGGI. This will save several hundred million dollars per year in allocation fees paid by generators and that are eventually passed on to ratepayers. RGGI has been proven to both increase costs and emissions due to leakage. In fact, as a result of RGGI, cleaner New Jersey generation facilities are required to shut down while dirtier plants in other non-RGGI states (g. Pennsylvania) are allowed to operate;
- Use the Clean Energy Fund to support grid enhancements which will both save energy and lower impacts to ratepayers;
- Consider the repeal of existing taxes and charges imposed on utility costs;
- Set capacity rate caps at the PJM level. While the PJM capacity market is an efficient tool to encourage generation growth through market signals, distortions in those markets can lead to excessively high capacity charges. PJM should set capacity price caps that are set to ensure market growth without excessive costs being passed onto ratepayers.
Encourage Natural Gas Generation – The increased use of natural gas for electric generation may be the most expeditious way to develop firm, baseload power generation. However, currently, New Jersey policies and regulations discourage, if not outright prevent, the development of new and even expanded generation facilities.
These policies need to change to develop the electric generation needed to fuel future economic growth and maintain reliability of the grid. Toward that end:
- The policy of the State should be to encourage the upgrade and expansion of existing natural gas facilities as well as the development of new facilities;
- Existing regulations of the Department of Environmental Protection that sets increasingly stringent limits on carbon emissions of natural gas powered EGUs should be delayed or repealed, or, in the alternative, incentives should be put in place, as necessary, to prevent the closure of existing EGUs;
- Revisions to the environmental justice law and regulations may be needed to allow the expeditious upgrade or expansion of existing natural gas powered EGUs or the development of new such facilities.
