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It’s Chinatown: PSEG sale to NYC a jersey ripoff

BPU’s “hands tied” by deregulation – deal would lead to more air pollution, greater global warming emissions, and higher rates for consumers. PSEG announces that new nuke plant planned for south jersey. New plants and transmission lines for north jersey

Ed Selover, Executive V.P. and General Counsel, PSEG defends controversial power sale to NY City before Assembly Utilities Committee.
Former Star Ledger political columnist, Tom Moran, recently hired as PSEG’s Policy Director, watches hearing from the shadows.
Moran received a baptism of fire – It will take Moran’s best spin to pull PSEG’s chestnuts out of this fire.

Trenton – PSEG’s Executive Vice President and General Counsel appeared before the legislature today to try to justify PSEG’s controversial plan to sell electric power to NY City produced by the plant in Ridgefield, Bergen County. The proposal had been blasted by NJ Rate Counsel as likely to lead to higher rates and a less reliable power system for NJ consumers.
Other NY City power export deals already under consideration would cost over $1.5 BILLION in new power plant construction and transmission lines to offset and mitigate the loss of NJ produced power (PJM testimony). NJ Rate Counsel,Stephanie Brand, testified that the Bergen deal would cost NJ ratepayers from $35 million to $120 million/year in higher electric rates, while providing windfall profits for PSEG

PSEG plant, Ridgefield, NJ.
Plant would leave the NJ grid and connect to Con Edison’s 49th street Manhattan station. Plan would require new transmission lines, including one under the Hudson River.

An Assembly Committee held hearings today to explore the impacts of the sale on NJ consumers and regional electric markets. The deal would allow PSEG to supply NY City with 550 MW of power generated by PSEG’s Bergen power plant, which would abandon the “PJM” grid. A new 660 MW line would be buried under the Hudson River, providing additional capacity to export even more power.

Joseph Fiordaliso, Commissioner, Board of Public Utilities (BPU) – warns Assembly Committee that BPU’s “hands are tied” and BPU has no power to block the PSEG deal, beyond sending a “protest letter” to the Federal Energy Regulatory Commission (FERC).
Sam Wolfe, BPU Chief Counsel answers questions regarding ratepayer and system reliability impacts of proposed PSEG NY City power sale. Wolfe is a former Assistant Commissioner at NJ DEP (no relation to this author).

The NJ Board of Public Utilities (BPU) raised major concerns about the impact of the deal on the reliability of the PJM grid and electricity prices. Joseph Fiordaliso, Commissioner of BPU warned the Assembly Committee about negative aspects of the deal, including higher prices for NJ consumers, more air pollution, and an increase of imports of dirty power from the mid-western coal plants. But he said BPU’s “hands are tied”. As a result of energy deregulation passed by the NJ Legislature, BPU has no power to block the PSEG deal, beyond sending a “protest letter” to the Federal Energy Regulatory Commission (FERC). Unfortunately, no legislator seemed willing to explore this predictable consequence and fatal flaw of energy deregulation.

Stephanie Brand, NJ Rate Counsel implores the Committee to do everything in their power to “stop this” deal from going forward.

NJ Rate Counsel,Stephanie Brand, strongly opposed the deal, calling it “grossly unfair”. She testified that it would cost NJ ratepayers from $35 million to $120 million/year in higher electric rates, while providing windfall profits for PSEG. Brand also raised concerns about effects of reliability after the PSEG Bergen plant abandons the NJ energy market and PJM grid for the “greener” pastures of NY City. This deal would open the door to even more exports of NJ produced power to serve NY City, leaving NJ holding the bag for higher electric rates and more pollution. Brand took strong exception to PSEG’s claim in its filing with the Federal Energy Regulatory Commission (FERC). According to Brand, PSEG’s FERC filing claimed that when a private market entity behaves in a market driven way, then consumers are automatically better off! Free market fundamentalism. PSEG filing argued that FERC should not review the negative economic impacts on NJ and that impacts on reliability were beyond the scope of FERC’s review and should be ignored. Brand implored the Committee to do everything within their powers to “stop this” deal.

Steve Gabel, Gabel Associates (energy consultant). Gabel sought to educate the Committee about the “big picture” of “dynamic energy markets”. Gabel stressed “the benefits of interstate commerce” and was the only testimony that addressed related isues of energy efficiency, renewable power, and the global warming bill RGGI.

Energy consultant Steve Gabel focused on the “big picture” of “dynamic energy markets”. Gabel stressed “the benefits of interstate commerce” in energy markets.Gabel identified a “paradox” whereby NJ electric rates were tied to the low price of high polluting coal, a fact that makes investments in new cleaner power sources uneconomic. But just weeks ago, Gabel emphasized that interstate energy markets were a danger to efforts to combat global warming. During legislative consideration of the “Regional Greenhouse Gas Initiative” (RGGI) bill, Gabel joined PSEG and a chorus of energy lobbyists to warn of potential higher prices and increases in global warming emissions due to increasing imports of dirty coal power from the mid-west. What 8 weeks ago was criticized as “leakage” that would undermine global warming policy and increase rates, has now become a pro-consumer “dynamic market in interstate commerce”.

“Pennsylvania/Jersey/Maryland (PJM) regional power grid representative brief the Committee on PJM role in power distribution, reliability, and rates.

The testimony of PJM representatives should be required reading – a primer on the economic and regulatory policy barriers to reducing coal based global warming emissions and market entry/access restrictions to renewable power technologies. The PJM primary goal is system reliability – with reliability viewed very narrowly as limited to increases in power production and distribution. As a result, economic regulatory policies provide incentives for more traditional power production that undermine energy conservation and renewable power.For example, no one mentioned the concept of a “carbon adder” to make dirty coal power prices reflect their true staggering environmental costs. The Committee took no testimony from environmental experts or those concerned about global warming.

Ed Selover summarizes PSEG’s $8.5 billion investment in new power capacity; $5 billion investment in new power distribution; plans to develop a new nuclear power pant in south Jersey; and plans to expand costly new power plants in north jersey (oh, BTW, he also mentioned PSEG commitment to clean air and global warming, and investments in what he called “non-traditional projects” like a $5 million energy efficiency pilot project and a $50 ($15?) million new electric metering initiative. So much for reciprocal investments between new supply and demand side management and renewable energy!).
Massive and controversial PSEG plans presented as a fait accompli (that’s a done deal, for Jersey folks).
Rick Thigpen. PSEG lobbyist.
Thigpen has close ties to the NJ Democratic party.
Karen Alexander (seated). Alexander is a former DEP Assistant Commissioner and knows how to work the inside DEP and BPU regulatory game.
Assemblyman John Rooney (R/Bergen) – called for investigation of potential “fraud” in prior PSEG regulatory filings

During the recent legislative debate on the RGGI bill, energy lobbyists suggested that PSEG was involved in a “paradigm shift” from earning profits from producing power to earning profits from reducing and conserving power. They used this argument to justify new regulatory policies and economic incentives for “rate decoupling” and enhanced return on investment for conservation and efficiency. But today we heard a completely different tune. Today, we heard that PSEG is for sure in the power production business. PSEG cavalierly announced multi-billion plans to increase in-state power production (including, BTW, a new nuclear plant) and plans to construct more transmission lines. Few concerns were expressed about imports of dirty mid-west coal. So much for global warming and all that tree hugger stuff.
During the recent RGGI debate, energy lobbyists suggested that NJ power demand far outstripped instate energy supply, causing imports of dirty mid-west coal power. How can they now claim that EXPORT of NJ generated power to New York City will have no impact on system reliability or air quality?
The whole scene recalled the closing line of one of my favorite Jack Nicholson movies:
“Forget it, Jake. It’s Chinatown.”

Planned Energy Exports from NJ to NY – 2,360 MW total

According to PJM, the following NJ power exports are planned or underway:

1,200 MW (Bergen, proposed)
300 MW (Linden under construction)
200 MW (Linden, proposed)
660 MW (Neptune to Long Island, existing)

  1. jerseyswamp2
    March 10th, 2008 at 20:38 | #1

    Excellent report on a complex issue! This stuff usually gets rubber stamped without the public knowing anything about it. Renewing Oyster Creek , adding another reactor in Salem, and letting the old coal plants in Bergen and Essex blaze away: all so we can supply NYC? With Thigpen greasing the skids of the Dem machine, the BPU crying crocodile tears and PSE&G’s duplicity unchallenged it looks like the power boys wired this deal a long time ago. Tom Moran is already looking uncomfortable – he’ll get use to it.

  2. njyikes
    March 10th, 2008 at 22:20 | #2

    But why aren’t companies not willing to do business in NJ? Hmmmm……

  3. nohesitation
    March 10th, 2008 at 23:16 | #3

    Hey jerseyswamp – you got this all down pat.
    I sens e you have the taste of personal experience with these snakes in your mouth.
    Thanks pal.
    NJyikes – commercial and industrial ratepayers will get screwed by this deal as well as the residential folks.
    I am not opposed to higher rates, per se, but only if the money is going towards efficiency and renewable power as solutions to clean air adn global warming- but higher rates for windfall profits for PSEG shareholders and NY CIty lights?
    FTS (trey and guess what that stands for)

  4. homesearcher
    March 11th, 2008 at 11:16 | #4

    I’ve already written my congresspeople about this issue. I’d suggest you all do the same.

  5. nohesitation
    March 11th, 2008 at 13:05 | #5

    Thanks homesearcher, good idea.
    The NJ spokesperson for the American Pubic Power Association testified and suggested that folks pressure Congressional delegation to pressure FERC to kill this deal.
    He also suggested that folks urge support for national legislation, bill # S2660 – sorry I didn’t take good notes adn don’t have additional info right now on this.

  1. September 14th, 2009 at 08:48 | #1
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