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NJ Pays Over $1.5 Billion To Keep Obsolete Coal Plants Open

While Christie Strong Arms DRBC to Fast Track Approval of Fracking

[Update below]

Just when you thought it couldn’t get worse.

On Tuesday, I wrote about the absurdity of Christie’s energy policy, so my outrage is fresh and pain threshold still pretty high.

But, I’ll be damned, reading the press clips this morning managed to trip my outrage meter – twice!

First, I read Tom Johnson’s story in today’s NJ Spotlight:  BPU’s Lee Solomon Blasts Federal Agency – Frustration with FERC apparent as BPU president condemns regulatory structure as “unjust, inequitable, and outrageous”

Tom expands upon on an issue I wrote about last week in Enter the Twilight Zone of Energy Policy, where I noted the absurdity of subsidies to coal plants:

I recently read a PSEG document that bragged  see: Capacity Markets Ensure Reliability] that PJM capacity payment subsidies were what kept NJ coal plants open! (at over $1 billion in new pollution control costs, paid by ratepayers, not PSEG shareholders and investors [see: Doing Coal Right]).

At a time of global warming crisis, when we should be doing everything possible to shut down coal power plants, it is inconceivable that PSEG was allowed to spend over $1 billion – of ratepayer money no less – on pollution controls at the Mercer and Hudson County coal plants .

It is even worse that PSEG’s disasterous decision was driven by PJM subsidies known as “capacity payments“. Without those huge subsidies (over $1.2 billion per year in NJ), the NJ coal plants are not economic and would be shut down.

But the story being spun now is that PSEG wants to shut down the “obsolete” coal power plant in Hudson County, but allegedly is being blocked by the Federal Energy Regulatory Commission (FERC), who wants to keep it open for “reliability” purposes.

But if that is the story, why did PSEG spend $700 million to retrofit pollution controls on that obsolete plant and why are they now seeking $59 million in ratepayer money? (is that a recovery of the Hudson plant’s portion of those $1 billion in pollution control upgrades?). Hard to tell without reading the rate case filing (hint to NJ Spotlight: post links to the regulatory documents so wonks like me can read and find out!).

And in noting the irony of the situation, Rate Counsel brings in the unrelated issue of the Christie Administration’s plans to develop more in state power. Those plans were blasted just yesterday by NJ business groups .

But the $1 billion Mercer and Hudson pollution control investment decision, PJM capacity payments, and Christie plans are complex but distinct issues that unforunately are blended in the story as follows:

Solomon’s comments came as the agency was debating a motion to intervene in a case before the Federal Energy Regulatory Commission (FERC) in which a power plant owned by PSEG Power in Hudson County would receive $59 million in ratepayer money to cover improvements so it could remain available to run if needed to maintain the reliability of the regional power grid.

Rate Counsel questioned the need for Hudson to ensure reliability and notes the irony of the PJM ordering ratepayer subsidies to keep in service an “obsolete” plant while opposing efforts to build new, more efficient plants with ratepayer subsidies.

The Hudson plant ran 25 days in 2010, according to Michael Jennings, a spokesman for PSEG Power, which owns the facility. Last year, the plant received approximately $9 million in RMR payments, according to Raymond DePillo, vice president of power operations and asset management for PSEG Resources, an affiliate of PSEG Power. The company receives a 12 percent return on carrying costs for the money it invests in the upgrades, according to PSEG officials.

Nonetheless, the company, in a filing it made with PJM this past Monday, said it would prefer to close down the unit “as soon as possible,” a stance it has held for the past several years. “If PJM can identify other areas to reliably operate the affected portions of its system, the PSEG Companies will move forward with the retirement of the unit,” the filing said.

If these issues were made distinct, BPU Lee Solomon’s outrage at FERC could be seen as a diversion from NJ’s own failed energy policy.

Not to be outdone by Solomon’s diverionary tactics, PSEG takes hostages.

In the close of the story, we learn that PSEG and regulators see lower energy costs on the horizon, but only if they are allowed to build the destructive Susquehanna – Roseland transmission line, to import more dirty coal power!

They acknowledged prices are steeper in northern New Jersey but argued they will fall when new transmission projects are completed, particularly the Susquehanna-Roseland project, which runs from the Delaware Water Gap to Roseland in Essex County.

And for all those rabid right wing RGGI opponents out there, please note that the $59 million is close to the annual RGGI auction proceeeds, which were $65 million last year.

After my head exploded reading that NJ Spotlight story, the next one I came upon was Sandy Bauers’ Philly Inquirer story N.J. pressures river panel to adopt gas rules, which begins.

New Jersey is playing hardball with an interstate commission considering rules on natural gas drilling affecting the Delaware River.

At two recent meetings of the Delaware River Basin Commission (DRBC) – one of them Wednesday – the New Jersey representative, John Plonski, said the state might withhold payments to the financially strapped commission if it failed to vote on the rules at its next meeting, in September.

Critics said the state was improperly engaging in strong-arm tactics.

It’s shocking that a state would pull this kind of bullying tactic that amounts to extortion,” said Tracy Carluccio of the Delaware Riverkeeper Network, an environmental-advocacy group.

Those DRBC rules are not only seriously flawed, adoption would lift the current DRBC moratorium on fracking in the Delaware watershed.

NY State just agreed to lift their moratorium on fracking, and Pennsylvania is experiencing and strongly backing a huge expansion in drilling.

So, adoption of the DRBC regulations would open the door to drilling oover 18,000 wells in the watershed.

This is why the Christie DEP is strong arming the DRBC – they are doing the dirty work of their gas industry backers at tremendous risks to NJ’s economic and environmental interests:

Lifting the current DRBC moratorium would open the door to over 18,000 wells in NY and Pennsylvania, according to DRBC. Those wells would use over 100 BILLION gallons of water; generate more than 25 BILLION gallons of toxic hazardous wastewater with unsafe levels of radioactive contaminants; and destroy over 150,000 aces of forests and farms, more than all the land protected by the NJ Highlands Act.

At I said, my outrage meter was tripped.

[End note: this post was corrected to try to clarify the Hudson coal unit (that got the $700 million upgrade) from the gas unit (seeking the $59 million to upgrade)  – sorry for any confusion. Tough to figure all this complex stuff out without the underlying regulatory documents. It is my policy here at Wolfenotes to work off and post the underlying documents for readers to consider.]

[Clarification: 8/5/11 – Hudson unit #1 is gas and oil fired, Hudson Unit #2 is coal.]


NJ Spotlight reports today that it Unit #1 will be closed. It was under a $28 million pollution control upgrade per DEP’s March 2, 1011 Clean Air Act Regional Haze BART determination. PSEG spent $700 million upgrading unit #2 coal – that money would have been much better spent closing that unit down and investing in efficiency and renewables. end update]

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  1. Bill Neil
    July 15th, 2011 at 13:05 | #1


    Thanks for keeping your readers up-to-date. What especially caught my attention were the tactics in front of the Delaware River Basin Commission; the water demand/pollution threats from the fracking techniques used to extract natural gas. It’s a matter which deserves the DRBC’s most critical and objective scrutiny on behalf of the long term public interest and their mission to manage and plan for the River Basin – with the watchful eyes of the folks at the Delaware Riverkeeper looking over their shoulders.

    But it should also be a reminder – to those Global Warming deniers who proclaim that human beings couldn’t possibly create the calamity of warming all by themselves – that we’re not capable of such impacts – that indeed, we are capable of it and the Delaware River is a very good case study of those impacts.

    I invite your readers to consider the history of the DRBC itself, and its mission, and the need for federally sanctioned planning and regulatory powers which became apparent to many as early as the 1950’s: that population pressures and the needs of the power industry in generating electricity – already were indications of the overwhelming human impacts on the River, and its ability to keep fish alive – and cooling intakes full – during the low flow summer days and especially during droughts, as measured by the flows at Trenton.

    So here we have a thoroughly managed resource, trying to protect what’s left of nature and keep the lights on, and the history of the DRBC’s decisions shows that it is also intimately wrapped in the needs and demands of the power industry. If readers had any doubt, consider the reasons for the Merrill Creek Reservoir and Pumping Station, emerging in the late 1970’s. Here at


    So it takes great human effort to keep this juggling act going…and fracking threatens to place even more pressure on it…despite the natural gas industry’s distant promise to take us away from the great water cooled plants of coal, oil and nuclear…

    Knowing this history, why wouldn’t we all want to move away from these sources which place such demands on the health of nature and citizens alike?

  2. Bill Wolfe
    July 15th, 2011 at 13:32 | #2

    @Bill Neil
    You got to the essence with this, Bill:

    “Knowing this history, why wouldn’t we all want to move away from these sources which place such demands on the health of nature and citizens alike?”

    I don’t think may know of – or care about – this history. Who was it (Gore Vidal?) who wrote about American’s historical amnesia?

    As Faulkner wrote (papraphrising) “The past ain’t history, it’s not even over”.

    And exploring the complexity of connecting the dots between economic growth and overshoot of natural ecosystem capacity is beyond our journalists’ horizons, adn conflicts with the corproate powers that be who pay the ad revenues.

  3. Bill Neil
    July 15th, 2011 at 14:11 | #3

    Bill, after posting the first comment, I thought of a challenge to the pro-fracters, a question of pushing the limits of what we know about groundwater, rooted in two troublesome NJ examples; this sets aside for the moment the very, very important issue of what chemicals frackers need to pump into the ground – hundreds of feet down – and their toxicity – in an attemp to free the gas – for the considerations of how water flows and where, underground, an issue which also comes up in tracking the toxic plumes from superfund sites, and other categories of sites,like leaking oil tanks…which you know a lot about, at least through the nightmares of trying to get them cleaned up.

    What I was thinking about were all the problems caused by the cut of Route 78 across NJ, esp. at Musconetcong Mountain (that’s Jugtown Mtn. to locals in Bethlehem Twp), in regards to hydrology…after all, where do all those beautiful ice formations come from in the winter at that cut…it looks like you’re in the Alps as you crest the mountain and look at those huge ice formations to either side…and my understanding is that the same issues of unanticipated and unknown water flows were a signifcant cause of the delays of cutting Route 287 through the NJ Highlands…and these were surprise above ground flows through the rock-mountains themselves…

    It’s my understanding of geology that it is even more difficult when you try to map water flows/travel deep underground and over large distances…and then throw toxic chemicals into the mix…this is a dangerous, dangerous comgination of unknowns…but that’s what the safe management of fracking comes down do…if it can be done safely…at all…

    Just a little passing thought, having passed through those two road cuts many times, and where all the water troubles were…above ground.

  4. Bill Wolfe
    July 15th, 2011 at 14:29 | #4

    @Bill Neil
    Ahh Bill, to the technical essence again!

    Fractured geology is theoretically impossible to know with a high degree of confidence.

    THe fracking practice (high pressure) actually creates additional fractures, but thousands of feet belwo the surface.

    The indsutry argument is that it is impossible – or highly unlikely – for one of this deep fractues to ever make it to the surface or even deep aquifers, which are allegedly protected by thousands of feet of (unfractured?) rock.

    IT seems that the higher probability failure are risks from the cementing of the well casings. THis is the same technical risk as what caused the BP oil blowut – inadequate seals on well casings – bad cement job.

    Either way – this seems like far too risky a technology – with irreversible impacts if somethign goes wrong, which is a statistical certainty that it will – – especially when cheaper and cleaner alternative technologies are currently available.

    And of course the corporations play a game of heads I win, tails you lose.

    They privatize the gains and socialize the costs, and thus take no risks themselves.

  5. Bill Neil
    July 15th, 2011 at 14:41 | #5


    What’s wrong with environmental consulting and P.R industries these days, Bill, that they let the gas industry call the process “fracking?” Just on the phonetics of the term, it’s a loser, somewhere between “hacking” and “choking,” with neither of those words having very pleasant connotations. And the more one learns about the reality of “fracking,” literally “fracturing the geology” into new and unknowable pathways, and then pouring/forcing toxic chemicals into the “channels” to get the geology to “cough” out the gas – why, upon further reflection, isn’t this really a process of “water-boarding” nature, and isn’t that forbidden by the Geneva Conventions?

  6. Bill Wolfe
    July 15th, 2011 at 14:50 | #6

    @Bill Neil
    Jesus Bill, you’re on fire today!

    First the history, then the science and technology, now the rhetoric!

    Waterboarding nature!

    Love it!

    Got go out and ride my bike rigth now for 25 miles at 15 mph on that one!


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