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Rate Counsel suggests NJ slow down the pace of offshore wind development
NJ Spotlight|Tom Johnson|Dec 15, 2022
Rate Counsel Director Brian Lipman suggested slowing down the pace of offshore wind development as higher interest rates, supply chain disruptions and inflationary pressures are causing some developers to seek to renegotiate the contracts they have been awarded to build wind farms. ...“Ratepayers simply cannot afford drastically higher electric bills,’’ he said. Utility customers already have been hit with steep increases this winter in their heating bills because of rising costs of natural gas. Monthly bills increased for the state’s four gas utilities from 15% to as much as 24%
Rate Counsel Director Brian Lipman suggested slowing down the pace of offshore wind development as higher interest rates, supply chain disruptions and inflationary pressures are causing some developers to seek to renegotiate the contracts they have been awarded to build wind farms. ...“Ratepayers simply cannot afford drastically higher electric bills,’’ he said. Utility customers already have been hit with steep increases this winter in their heating bills because of rising costs of natural gas. Monthly bills increased for the state’s four gas utilities from 15% to as much as 24%
As state goals for offshore wind continue to increase, so do the costs. Some say economic and financial uncertainties will be less costly in a year or two
New Jersey should consider scaling back how much new offshore wind capacity is approved next year because economic and financial uncertainties could lead to higher prices, according to the Division of Rate Counsel.
Rate Counsel Director Brian Lipman suggested slowing down the pace of offshore wind development as higher interest rates, supply chain disruptions and inflationary pressures are causing some developers to seek to renegotiate the contracts they have been awarded to build wind farms.
“This is of great concern,’’ Lipman told the staff of the state Board of Public …
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As state goals for offshore wind continue to increase, so do the costs. Some say economic and financial uncertainties will be less costly in a year or two
New Jersey should consider scaling back how much new offshore wind capacity is approved next year because economic and financial uncertainties could lead to higher prices, according to the Division of Rate Counsel.
Rate Counsel Director Brian Lipman suggested slowing down the pace of offshore wind development as higher interest rates, supply chain disruptions and inflationary pressures are causing some developers to seek to renegotiate the contracts they have been awarded to build wind farms.
“This is of great concern,’’ Lipman told the staff of the state Board of Public Utilities Tuesday during a stakeholder meeting. The board was meeting to discuss making a third solicitation for offshore wind projects early next year. Lipman suggested that the board’s staff develop guidelines to prevent after-the-fact increases to contracts awarded to developers.
Ørsted, the developer of New Jersey’s first offshore wind farm about 15 miles off Atlantic City, has acknowledged it is not earning what it expected on its U.S. projects. If the company seeks to renegotiate its contract, it must file a petition with the BPU, Lipman said.
“Ratepayers simply cannot afford drastically higher electric bills,’’ he said. Utility customers already have been hit with steep increases this winter in their heating bills because of rising costs of natural gas. Monthly bills increased for the state’s four gas utilities from 15% to as much as 24% this fall.
The higher energy prices have not slowed down the Murphy administration’s push to accelerate the development of offshore wind. Earlier this year, Gov. Phil Murphy raised the state’s goal for electricity from offshore wind from 7,500 mw by 2035 to 11,000 mw by 2040.
The state’s third solicitation for an offshore wind developer, scheduled for the first quarter of next year, could be its largest to date, outlining a potential award block from 1,200 mw to 4,000 mw. So far, the state has approved three offshore wind farms — none of which are operating.
“This might not be the time to take this large a bite,’’ Lipman said in an interview. Because of the economic and financial uncertainties now, the prices ratepayers pay may be much lower in a year or two if those issues are resolved, he said.
“It may be time to take a look at a slowdown. Financially, it may not make sense to go ahead with (as much) as 2,400 mw,’’ Lipman said. “It seems likely the price of offshore wind will go down by the next solicitation.’’
Meanwhile, Public Service Enterprise Group is reviewing its option to invest a 25% stake in Ørsted’s Ocean Wind I project, located about 15 miles off Atlantic City. The 1,100-mw project is not expected to be operational until the middle of this decade.
Mike Makarski, a spokesman for the Affordable Energy Coalition of New Jersey and a critic of the state’s clean energy agenda, was not surprised by Rate Counsel’s concerns. “We would be having a much different discussion if the BPU had been honest from the beginning of how much this would cost,’’ he said.
Doug O’Malley, the director of Environment New Jersey and a longtime advocate for offshore wind, said the fiscal problems facing the sector are an issue with any long-term infrastructure project. “Offshore wind is not immune to the world’s economy. Supply chain challenges won’t last forever,’’ he said.