Keeping the Cost of Power Competitive

In Action on Energy

By Sara Bluhm, NJBIA Vice President of Environment & Energy On Jul 31, 2017

When it comes to public policies that contribute to New Jersey’s high cost of doing business, employers will most often point to healthcare, taxes and regulations as the biggest contributors, and rightly so. But energy costs are not far behind.

New Jersey’s overall electric costs are the 10th highest in the country. Even though the state has efficient energy providers and a diverse portfolio of energy sources, government regulations and taxes contribute significantly to the cost of energy for residents and businesses alike. And energy costs do not have the same impact on all consumers. Manufacturers, in particular, generally require a lot more energy to operate and therefore face a bigger competitive disadvantage because of the state’s relatively high cost of energy.

Any effort to improve New Jersey’s business climate must include policies to control energy costs and promote energy innovation.

Taxes and regulation. On average, 24 percent of the typical commercial and industrial electric bill can be attributed to government-imposed costs. This is down from 27 percent a few years ago thanks to the elimination of TEFA (Transitional Energy Facilities Assessment), which was phased out as part of the 2011 business tax reform package.

Regulations, too, contribute to New Jersey’s relatively high energy costs. NJBIA continues to oppose subjecting New Jersey to cap-and-trade programs like the Regional Greenhouse Gas Initiative, which would add unnecessary regulations and costs to the state’s natural gas generation.

Societal Benefits Charge. NJBIA also believes that the Societal Benefits Charge (SBC) can be reduced without impacting the Clean Energy Fund, which the SBC supports. The Clean Energy Fund provides grants and incentives to promote private use of renewable energy and support energy conservation. In recent years, substantial funds have been diverted from the Clean Energy Fund. If the money is not being used for its intended purpose, then it should be returned to ratepayers. Over collecting the SBC does not help reduce energy bills or keep New Jersey businesses competitive.

Supporting Clean Energy. Making energy more environmentally friendly goes hand-in-hand with improving the state’s business climate. After all, increasing efficiency is both good for business and an effective way to reduce pollution. For every $1 invested in business there is an $11 return on the investment, while a $1 investment in residential yields only a $4 return. Programs that provide for retrofitting buildings help to minimize the carbon footprint, implement new technology and save companies on energy costs.

 

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