Lawmakers warn BPU chief against any new subsidies to offshore wind
May 24, 2023 - New Jersey Spotlight
The Senate Budget Committee chairman warned the Murphy administration against asking lawmakers to back new subsidies to developers who have won contracts to build offshore wind farms.
In the committee’s final budget hearing Tuesday, Sen. Paul Sarlo (D-Bergen) said he and others on the panel have heard rumors there is going to be a request to subsidize wind projects currently under construction.
“Not that I am aware of,’’ replied Board of Public Utilities President Joseph Fiordaliso, whose agency is overseeing the administration’s aggressive efforts to make New Jersey a hub for an emerging offshore wind sector along the East Coast.
“Good. That’s good to hear,’’ Sarlo said. “I am going to have a very difficult time supporting any future subsidy for these developers.’’ Other legislators on the committee, on both sides of the aisle share those concerns, Sarlo said.
Since last fall, there have been questions asking if Ørsted, the developer of the state’s first offshore wind project off Atlantic City, had approached Gov. Phil Murphy’s office, seeking to renegotiate its contract. That followed an acknowledgement by the company’s chief executive that returns on the project will not be as high as anticipated. Inflation and rising interest rates are believed to be a factor in those questions about the project’s financial viability.
Sarlo was not sympathetic. “These are players, international players, who knew what they were getting into when they built these facilities. They are going to have to step up their game,’’ he said.
While not outright dismissing the talk of a possible renegotiation, Fiordaliso and Economic Development Authority CEO Tim Sullivan speculated that if these offshore wind projects are getting new fiscal support, that may be related to federal aid that could be provided to states from passage of the Inflation Reduction Act.
“We have to see guidelines from the federal government how much money the feds will send here,’’ Fiordaliso said. “We have to determine where that money is best spent.’’
Fiordaliso faced rough questions from the committee about the whole offshore wind initiative, hearing concerns about the cost to ratepayers, worries over a wave of deaths to marine mammals in the past few months, and whether it could harm New Jersey’s lucrative tourism industry.
No offshore wind farms have been built off New Jersey’s coast, but Murphy has set a goal of building enough offshore wind capacity to supply 11,000 megawatts by 2040, or roughly enough to supply more than 27% of the state’s electricity.
What about the cost?
Sen. Michael Testa (R-Cape May) noted the state has spent more than $1 billion on various projects to build a robust offshore wind sector. He questioned the impact on utility customers, who are providing a subsidy to developers to build their projects.
Ratepayers have not seen any impact yet from the wind projects, Fiordaliso told the committee, and would not see any increase in bills until the projects begin to supply power to customers.
Testa also expressed concern about the mortality of marine mammals, believed by project opponents to be caused by increased shipping activity by offshore wind surveying vessels. “Where is the urgency to get this done,’’ he asked, citing requests from critics, local and other officials for a moratorium on projects.
“The urgency is, in my mind, very simple,’’ Fiordaliso said, citing rising ocean levels and melting glaciers. “Our generation is going to be judged upon how we mitigate the effects of climate change.’’
He also defended the administration’s goals of electrifying the transportation and building sectors, the two biggest sources of emissions contributing to climate change. He also disputed that the administration has mandates to eliminate gas stoves.
“There is not going to be gas stove police coming around. It will be a long time before we abandon backup fuels like nuclear and natural gas,’’ Fiordaliso said.
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