A controversial bill, know as “LS Power Bill” has recently put New Jersey Governor Chris Christie under some pressure. The bill, A. 3442, is a reaction to regional power-grid operator PJM Interconnection’s (PJM) reliability pricing model (RPM) that is designed, among other things, to encourage the construction of electric generation through incentive rates. The bill says the state must take action to ensure that enough electric generation is available in the region because the incentives under the PJM’s model have failed.
The goal of A. 3442 is to establish a long-term capacity agreement pilot program to promote the construction of qualified in-State electric generation facilities.
The legislation would allow for a guaranteed long-term income for developers of several large power plants, and the bill’s supporters claim that it would significantly lower energy rates for residents.
“The guarantees were necessary to obtain financing to construct the 640-megawatt plant along the Delaware River, which would cost from $800 million to $1 billion,” said Tom Hoatson, director of regulatory affairs for LS Power.
If approved, the new plant would create construction jobs for 500 people, and 25 permanent jobs.
Opponents of the bill, which include Exelon Corp., say it is an “anticompetitive sweetheart deal that will cost consumers in the long run.”
Challengers claim a move like this would “set the clock back” years, and undo efforts to make electrical-power markets more competitive.
George M. Waidelich, vice president of energy operations for Safeway Inc., says, “we cannot afford an energy surcharge to guarantee billions of dollars of revenue to a few select developers.”
Currently, the bill is under review with Governor Christie. Officials expect that the Governor will likely sign the legislation after his office has secured amendments that address concerns about the bill’s potential negative impact on competition in the electric generation market. The Governor’s office was consulted in the last draft of amendments.