Continuing our coverage to address potential misconceptions about rising energy prices and how our energy infrastructure issues will challenge the state’s economic future. Read part 1 here.
Energy — more specifically, the cost of energy and how it can be lowered — figures to be a big point of discussion Sunday night, during the first gubernatorial debate between candidates Mikie Sherrill and Jack Ciattarelli.
The good news: The next governor can freeze or cut utility bills, ideas both candidates have pitched. But it will come at a cost.
So said Alex Stern of Exelon, the parent company of AC Electric, at a recent thought-leader energy conference by the Meadowlands Chamber and the N.J. Utilities Association.
“It’s possible to certainly do that,” he said. “It requires negotiation with utilities. It requires some political heft, but … the credit card bill comes due at some point.
“So, you can pull those tricks, and you can do those things, and you can use amortization, you can use freezes, but eventually folks are going to have to pay.”
Stern said that’s part of the regulatory model. And no different than when public utilities invested millions in infrastructure improvements after Superstorm Sandy — improvements that ratepayers will pay for in the decades (not years) ahead.
In short, the next governor can make energy bills go down, but they will not be able to lower the cost. Think of it as a credit card bill, you can pay a lower rate each month, but that won’t make the amount owed go down.
And it won’t change this key fact: Even though New Jersey is part of a regional grid (meaning we can get energy from other states), we do not produce enough energy on our own (which hurts everyone).
So … what can be done — or should be done? How does the state address the supply-and-demand problem that is causing these bill spikes?
BINJE, after talking to numerous industry officials — and moderating a conference on the subject — offers this straightforward look at the issue in a modified question-and-answer format.
BINJE: The state produces more of its energy from natural gas than any other source. And yet, natural gas — for a while — was viewed with askance by the Murphy administration, which was encouraging users to switch to electricity (remember the whole gas stove crisis?) Ciattarelli has been strong in his support for adding to our natural gas efforts. Greg Lalevee, the leader of IUOE 825, also spoke out strongly in favor of an increase in natural gas facilities — is that the right call?
We turn to Max Bergeron (cool name, no relation), a manager of stakeholder relations at Enbridge.
A: At Enbridge, we’re looking at a whole host of solutions to provide more energy to where it’s needed. Renewables are certainly a part of the solution, and we’re investing in renewables, but we also need a reliable base load, and oftentimes that comes in the form of natural gas-fired power plants, which we supply.
In New Jersey, specifically, we have a project currently under construction and nearing completion, called the Appalachia to Market II project, which is being constructed in Pennsylvania, but is serving New Jersey utilities. We’re providing incremental capacity for them to be able to keep up with demand and also to help address some of the price volatility that can happen when you’ve got constrained pipelines.
So, we’re expanding our existing system. And we can do that within our existing rights of way or adjacent to our existing rights of way. With this particular project, we’re doing what’s called looping, which is when we install a parallel pipeline for a certain segment, so you’re increasing capacity.
BINJE: So, we’re guessing that will be cheaper than building a new facility. But can it come online any faster. There is a need for speed here?
A: “Natural gas pipeline projects go through a very structured regulatory process that’s run by FERC (the Federal Energy Regulatory Commission),” Max Bergeron said. “That, oftentimes, is a multi-year process.”
BINJE: In other words, bringing on more natural gas is not as easy as some would say it is – and it certainly cannot happen at a rate that will have any impact on the current energy rates that have so many up in arms. Any new project is going to cost a lot of money and time, one industry official told us.
But at least natural gas comes with a comfort level from ratepayers and residents. Another solution — small modular nuclear reactors, which can provide massive amounts of power — does not. Everyone loves nuclear, until it’s in their backyard, is a popular belief. But should it be? We asked Ron Simoncini, who is working as a broker at the Bedminster Technology Park — which would love to have these reactors. Simoncini, in fact, he has written a white paper on its benefits. Here’s his take.
A: “Let’s look back 60 years ago, when we decided to put the most important people in our country, our most courageous people, our patriots, yards away from nuclear reactors in submarines, 2,000 feet under the ocean,” he told the audience. “None of them has ever had radiation sickness.
The takeaway
New Jersey’s next governor needs to have a common-sense energy plan — one that embraces initiatives around renewable energy generation but does so while maintaining (and expanding) the current sources of energy that are powering our economy.
Simply put, we need a balance until renewable sources are predictable in their actual supply.
“We cannot roll the dice on meeting the demand on energy,” one insider said. “We cannot afford to stifle the innovation economy because we can’t power it.”
“If we’re going to say that we can put our most valued people yards away from a reactor in a submarine, we can say that we can dig a 100-foot pit in Bedminster and put a nuclear reactor in there. It will supply the power that people need to hyper scale in New Jersey.”
Simoncini said he wants New Jersey to lead the way.
“Ours population is going to use the services that come from that energy supply, so it should be here,” he said.
BINJE: No matter how you feel about small modular nuclear reactors, you can agree that their implementation is years away — if ever. Is there anything we can do now to help?
A: All the panelists said energy efficiency is the lowest-hanging fruit. And this is not just turning the lights out when you leave the room. There are utility-led initiatives that can have a far greater impact. One is being tested by New Jersey Natural Gas, which has two carbon-capture projects going on. We asked Pat Migliaccio, the chief operating officer at NJNG, to explain.
“At our operations center in Lakewood, we’ve worked with a company called Carbon Reform,” he said. “They connected a unit to our HVAC system. We are scrubbing the air, carbon, volatile organic compounds. It’s basically a filtration system on steroids. The benefit is that we now need to condition the air that is inside the building much less than we did — and we’re not introducing as much outside air. That will translate into energy savings and energy efficiency.
“At our corporate headquarters in Wall, we’ve got a different type of application, one that’s connected to our boilers, our chillers and our mechanical movements. It recycles the waste heat that’s coming off the flu — and we’re using that waste heat to preheat the water in our building.
“In both cases, we are capturing carbon which will help us meet New Jersey’s fairly aggressive emission-reduction goals.”
BINJE: And when it happens, New Jersey Natural Gas actually will make less money. Which seemingly would be an odd goal for a company.
A: “That’s OK,” Migliaccio said. “My greatest dream is that companies that make these products are wildly commercially successful, and the founders and vendors make tons of money.”
BINJE: We haven’t even discussed solar. New Jersey Resources is a leader in this area, having invested more than $1 billion in projects that often are co-located, meaning they are on top of a landfill, a parking lot — or even in a pond. And, of course, Solar Landscape is doing all sorts of good work, too.
Of course, the concern with solar (and offshore wind) is that energy can only be created at certain times. It then needs to be stored for use when it’s needed. (The units, by the way, are smaller than you think. One standard container can hold one gigawatt.)
We asked Phil Schade of H2M to discuss the potential impact battery storage can have on our energy cost problems.
A: “These systems are versatile,” he said. “They have the ability to solve a number of power-related challenges and are a great complement to intermittent renewables.
“We see it as an effective solution for grid stabilization, for addressing challenges where we have peak demand issues. Energy storage potentially can be used instead of bringing in new transmission lines or installing a fossil fuel powered plant.”
BINJE: So, where do we go from here? A start would be to get past the campaign rhetoric and address our economic reality.
Freezing or cutting bills makes for a fine debate point. As does blaming the other side. But for the state to go forward, the candidates need to offer forward-thinking ideas. The thoughts of these panelists are a good place to start.
