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The $1.5 BILLION Tax You Never Heard Of

While Gov. Christie & Conservatives Criticize Subsidies to Renewable Energy

Source: Rate Counsel (hit link below for document)

While many whine about the so called “high costs” of and consumer subsidies for renewable power, the above table shows how NJ residents and businesses paid over $1 BILLION in what are known as “capacity payments” last year and will likely pay $1.5 BILLION this year (2013). (Source: Rate Counsel).

In contrast, that so called “high tax, job killing, subsidy program”, known as RGGI – the program that Steve Lonegan, Americans For Prosperity, and Gov. Christie denounced as driving business out of NJ – would have cost about $50 million, just 1 thirtieth or 3.3% of the capacity payment – if Gov. Christie didn’t kill it.

Why do we hear so much about the 3% RGGI cost and virtually NOTHING about the 97% $1.5 BILLION?

Worse, that $1.5 billion in capacity payments purchases absolutely NOTHING! – No energy conservation, no energy efficiency, no renewable energy facilities. It’s a pure profit to the energy companies.

“Capacity  payments” are merely an energy charge dreamed up by a private corporation known as “PJM” that controls the energy grid. These “capacity charges” are theoretically supposed to provide economic incentives to develop in state energy capacity – but everybody agrees that they don’t work! (see BPU questions #5 & #6)


(even more bizarre is the fact that demand side capacity (energy effiiency, conservation, and local distributed power) is by far the cheapest and environmentally superior form of capacity – but  Gov. Christie and the energy industry are doing very little of that and are instead supporting generation and transmission forms of capacity, i.e. more new polluting power plants and transmission lines to import dirty power – but these are complex issues beyond the scope of this brief note. Again, Rate Counsel:

The total costs for procurement of demand side resources is on the order of hundreds of millions of dollars per year. In contrast, the total cost to procure BGS-FP energy and capacity alone is on the order of six billion dollars per year.

So, the next time some politician, businessman, or reporter complains about subsidies for solar and wind, ask them about those billion dollar capacity payments.

Tomorrow, we talk about the multi-billion costs the fossil fuel polluters impose on all of us so that they can make even higher profits while they destroy the future of our children and the ability of the planet to support our current civilization.

[Update: Ooops, I forgot to mention that while we are paying that $1.5 billion allegedly because we lack sufficient in state capacity, NJ EXPORTS huge amounts of power to New York! (see “Critical RTEP Issues”

Here is an illustration of that ripoff, but I think this PSEG deal was opposed by BPU & killed and never went through.]

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