NJ Goes to Court to Fight Federal Order on Renewable Energy Sources
State attorney general, Board of Public Utilities say energy regulator wants to ‘tip the scales’ away from clean fuels
New Jersey on Monday appealed a federal order that would raise the price of renewable fuels used for power generation, saying the measure would slow the switch to clean energy and exceed federal authority.
The state Attorney General’s Office and the Board of Public Utilities filed a petition for review with the D.C. Circuit Court of Appeals after the Federal Energy Regulatory Commission (FERC) said new sources of state-subsidized renewable fuels would in the future be covered by a rule that’s designed to preserve competition in the market for electric-generation sources.
New Jersey’s Division of Rate Counsel, an advocate for utility ratepayers, filed its own petition, and was joined by advocacy groups in Delaware, Maryland and the District of Columbia.
FERC’s order, published last year but not yet finalized, would mean that the price of renewables like wind and solar offered to power generators would have to reflect their actual cost of production, rather than a lower figure that was enabled by state subsidies.
The order was issued in response to the Minimum Offer Price Rule, a mechanism used by the regional grid operator, PJM, and which FERC said has become distorted by subsidies by some of the 13 states covered by the grid.
Opponents like New Jersey say the inclusion of renewables in the rule would hinder the adoption of carbon-free fuels and slow the reduction of emissions — both major goals of the Murphy administration.
‘Stacking the deck’
“From day one, the Murphy Administration has prioritized building New Jersey’s renewable energy programs, which we all recognize are critical to the state’s economy, to building clean energy jobs and to fighting back against climate change,” said Attorney General Gurbir Grewal, in a statement. “But now the federal government is trying to undo those efforts, and stack the deck in favor of fossil fuel companies instead. The federal government’s order is as unlawful as it is illogical, and today we’re challenging that action in court.”
BPU president Joseph Fiordaliso, who has previously spoken out against the FERC order, called it an “unwarranted intrusion into how states manage their retail electricity markets.” He expressed confidence that the appeals court would reverse what he called a “significant overreach” by FERC’s Republican majority.
Earlier this month, FERC denied requests by New Jersey and PJM for a rehearing on the rule.
A statement from the attorney general and BPU said FERC’s order has “tipped the scales” away from renewable fuels and toward fossil-fuel power sources. It did so by requiring that all new energy sources receiving state subsidies — representing the majority of renewable and zero-emission sources in New Jersey — are made available to the capacity market at a predetermined minimum price, the statement said.
FERC says its order reflects a need to restore competition to a market that has been distorted by the efforts of states like New Jersey to support the growth of sources like wind and solar in the early stages of their adoption.
The regulator said PJM’s so-called capacity market has become “untenably threatened” by what it called out-of-market payments by some states to support entry or continued participation by energy sources that might not otherwise be able to survive in the competitive market for wholesale electricity.
Pressure to create more subsidies
Continued subsidy by states would drive down auction clearing prices — the price at which buyers and sellers agree — and reduce revenue for fuel suppliers, increasing pressure on states to provide more subsidies, the commission said.
