Power plant tests New Jersey environmental justice law

Jul 22, 2024

Good morning and welcome to the weekly Monday edition of the New York & New Jersey Energy newsletter. We'll take a look at the week ahead and look back on what you may have missed last week.

Driving the day

POWER PLANT TESTS NJ EJ LAW — POLITICO’s Ry Rivard: New Jersey’s landmark environmental justice law is facing a major test — a new power plant in Newark that Gov. Phil Murphy’s administration is on track to approve over the objection of the city’s mayor and many of Murphy’s environmental allies.

The plant is being approved despite the 2020 law aimed at discouraging new pollution in “overburdened” communities, a term that, like “environmental justice,” refers to the disproportionately heavy toll industrial facilities have on communities of color and low-income.

The administration is trying to ease the blow of the decision by arguing it will impose “strict” conditions on the operations of the plant thanks to the law. But critics worry those conditions could be lifted in a new administration and the plant will be fully operational.

While relatively small, it will be the fifth such natural gas plant in Newark and will be placed in the city’s multi-ethnic Ironbound neighborhood, the very kind of community the law is meant to protect. The plant is meant to provide backup power to the Passaic Valley Sewerage Commission, one of the largest sewer agencies in the country.

Department of Environmental Protection Commissioner Shawn LaTourette, who announced last week his agency would green-light the power plant, said the sewer agency will have to reduce overall emissions from its existing operations and can only run the plant in emergencies.

Critics of the project are underwhelmed by those conditions, though, in part because Murphy will not be governor 18 months from now and they fear his promises could be undone once the plant is built.

LaTourette acknowledged the concerns but argues the law was purposefully designed to account for shifting political winds.

“That doesn’t mean there couldn’t be political forces that come to play to undo that,” he said. “But there are layers of legal guardrails to prevent that very thing because we knew that very thing going into developing the law.”

Skeptics include state Senate Majority Leader Teresa Ruiz, who questions whether the restrictions are “super cemented.” She worries another administration could allow the sewer agency to run the plant all the time to sell its power, which is what the sewer agency, known as the PVSC, originally wanted to do before it dropped the idea amid intense opposition.

“I feel like regs and policy and mission-driven agendas, if they are not codified in some way, there is an opportunity for any future administration to redirect course,” Ruiz said.

NJ GETS $250M FROM IRA — POLITICO’s Alex Guillen: Twenty-five projects across 30 states will receive $4.3 billion from Democrats' signature climate law to reduce greenhouse gas emissions, the Biden administration announced on Monday.

The funds are part of a pot of money included in the Inflation Reduction Act to tackle climate emissions. EPA estimated the grants will curb around 971 million metric tons of carbon dioxide equivalent by 2050, about the same as 250 coal-fired power plants' annual emissions.

EPA received more than 300 applications seeking $33 billion in funding, dramatically oversubscribing the program.

The recipients are the “cream of the crop,” EPA Administrator Michael Regan told reporters on Friday.

The list of grants includes $249 million for a coalition of I-95 corridor states led by New Jersey for charging infrastructure for electric medium- and heavy-duty vehicles.

The New Jersey-led I-95 application stood out "in terms of the greenhouse gas reductions that it would achieve," said Jennifer Macedonia, deputy assistant administrator for implementation in EPA's air office. It scored highly in terms of emissions reductions it would achieve and on environmental justice impacts.

John Podesta, the senior Biden adviser overseeing the IRA rollout, noted that the I-95 corridor through those states is one of the busiest for heavy-duty trucking in the country. "This is a very significant grant to be able to provide those benefits in terms of not just carbon pollution reductions, but in clean air and public health, in the community and in those corridors," he said.

Here's what we're watching this week:

MONDAY

— NYSERDA hosts a webinar on the fifth offshore wind solicitation and planned supply chain support, 10 a.m.

WEDNESDAY

— The New Jersey Board of Public Utilities meets, 10 a.m.

— New Jersey Transit’s board meets, 6 p.m.

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Around New York

— The state finally releases a plan to decarbonize Empire State Plaza, albeit with details of the geothermal options still pending.

— The Times Union checks in on the continued operation of the Digihost cryptocurrency mining operation at the old Fortistar gas plant in North Tonawanda.

— Researchers are trying to find out if biodiversity in New York City parks correlates with the wealth of surrounding communities.

— A local law in a Westchester County community regulating tree removal on properties has spurred a lawsuit.

Around New Jersey

— Amtrak passengers are facing more and more delays as temperatures climb.

What you may have missed

NJ GREEN-LIGHTS NEWARK POWER PLANT — POLITICO’s Ry Rivard: New Jersey Gov. Phil Murphy’s administration gave its approval Thursday for a gas-fired power plant to be built in the state’s largest city — over the objections of the city’s mayor and the governor’s wife.

The decision will allow a fifth power plant in Newark city limits and puts the governor at odds with his typical allies who have argued he is ignoring his own environmental and racial justice pledges.

The natural gas power plant — even as Murphy has pledged to rid the state of fossil fuels — is meant to provide backup energy to a quasi-state sewer agency. In 2012, Hurricane Sandy knocked out power to the region, idling the plant and causing hundreds of millions of gallons of sewage to spill into New York Harbor.

The power plant is supposed to ensure that never happens. For years, residents have fought the project. In February, first lady Tammy Murphy, then campaigning for the Senate, came out against the plant.

The governor and first lady put out dueling statements about the project on Thursday:

The governor’s spokesperson: “Our Department of Environmental Protection is requiring PVSC to take actions to reduce the total air pollution from the entire facility, including removing and upgrading existing boilers and generators on site and installing solar panels and battery storage.”

The first lady’s spokesperson: "The first lady's position remains unchanged — she does not support the proposed Passaic Valley Sewerage Commission facility in the Ironbound neighborhood of Newark.”

HOCHUL RAISES COST CONCERNS ABOUT CLIMATE GOALS: Don’t blame her for goals set in 2019 — “it was a different time.” Gov. Kathy Hochul was asked by the Times Union’s Dan Clark about Comptroller Tom DiNapoli’s audit finding issues with the planning for the 70 percent renewable electricity target set by the state’s landmark climate law the governor herself has touted. She said those goals were set based on information at the time and “predates” the then-lieutenant governor. “That was pre-pandemic, pre-supply chain disruptions,” she said.

“We continue to power forward, but there's some things that are out of our control,” Hochul said, noting the public isn’t rapidly adopting electric vehicles despite the state’s efforts. The governor said the state’s climate goals are something she “would love to meet, but also the cost has gone up so much. I now have to step back and say, ‘What is the cost on the typical New York family?’ Just like I did with congestion pricing.”

Her comments will probably stir even more concerns from environmental groups about Hochul’s commitment to meeting the statutory targets. It also raises more questions about whether the state will move forward with a cap-and-trade program. “if you're a family with three kids living in upstate New York … and your energy source is oil or even natural gas, what is the cost of that transition to you?” Hochul asked.

“We're going to get to our goals. If we miss it by a couple of years, which is probably what will happen, the goals are still worthy, but we have to think about the collateral damage of these decisions,” Hochul said. “Either mitigate them or rethink them.”

NYLCV president and CEO Julie Tighe said it was “mind-boggling” to hear Hochul’s comments a day after she toured storm damage in Rome. “I had not heard her say that before. I think some of the goals are obviously near term, but we have a long-term goal, and that is still well within reach,” Tighe said. “Coming on the heels of her pausing congestion pricing, you start to wonder if this is a trend.”

The Nature Conservancy’s New York executive director, Bill Ufelder, urged the governor to commit to the goals in the law and zeroed in on her opening the door to “rethink” the goals. “The science on climate change has not changed; we are at a critical moment in the fight to ensure the health, well-being, and economic strength of our state,” he said in a statement.

Democratic Sen. Liz Krueger posted on X in response to Hochul’s comments: “The passage of time does not change the law and it doesn't make the climate crisis magically disappear. We are dangerously behind on the science-based mandates in CLCPA. It's time to redouble our efforts, and build a more affordable, healthier, livable future for New Yorkers.” — Marie J. French

CENTRAL HUDSON RATE HIKE — POLITICO’s Marie J. French: Central Hudson gas and electric customers will see their bills rise starting in August. The Public Service Commission approved the higher rates for about 84,000 gas and 300,000 electric customers at its monthly meeting on Thursday. The company, which serves a swath of the Hudson Valley, is one of the smallest investor-owned utilities in the state.

Central Hudson botched the rollout of a new billing system in 2021, leading to penalties after customers were hit with high bills and uncertainty. Opponents of the rate hike have emphasized those failures as they fought to block the increases. Rate cases are among the PSC’s most powerful levers to influence utility investments and shape their contribution to New York’s clean energy transition goals. But the PSC also has to balance legal obligations that allow utilities to recover a return on their investments, with an eye toward stable bond ratings that keep borrowing costs — passed on to customers — low.

PSC Chair Rory Christian addressed opponents of the rate hike who held signs at the PSC meeting. As he has in the past, he sought to emphasize the legal requirements governing rate cases. He also reflected on the extensive damage from a tornado in Rome that he toured with Gov. Kathy Hochul and other officials earlier in the week.

MORE MISSED CLIMATE TARGETS — POLITICO’s Marie J. French: Five years after former Gov. Andrew Cuomo signed a landmark climate measure, New York is on track to miss most of the looming targets the legislation set. Gov. Kathy Hochul’s administration acknowledged in a July 1 report that the state was not going to meet the 70 percent renewable electricity by 2030 target — as offshore wind projects and upstate wind and solar development have faltered.

But the state is also poised to miss several other targets — either in the Climate Leadership and Community Protection Act, or set by Hochul or her predecessor — as costs for clean energy projects rise and the Covid-19 pandemic halted some construction efforts.

Environmental advocates worry Hochul won’t commit the resources needed to get New York on track to slash emissions and avoid the worsening impacts of climate change. “How many heat waves are we going to experience, and how many people are going to die in those heat waves?” said Jessica Azulay, program director of Alliance for a Green Economy. “We're in a race against time, and we can't really negotiate with greenhouse gas emissions.”

New York is expected to miss targets for energy efficiency, energy storage and electrification of vehicles and homes. Overall, the state as of 2021 had only reduced emissions 10 percent from the 1990 baseline. Much more progress will be needed to meet the 2030 target of a 40 percent reduction in the climate law.

NYSERDA President and CEO Doreen Harris pointed to the accelerating pace of adoption of heat pumps and electric vehicles as a sign that the state is making headway. “We have moved these markets in a very significant way,” Harris said in an interview. “The whole reason for setting goals … is to provide market sizing for the private sector to respond to.”

WATCHDOG QUESTIONS ORSTED DEAL — New Jersey’s ratepayer watchdog questioned a $125 million settlement between Gov. Phil Murphy’s administration and Danish wind energy giant Orsted, which canceled a pair of offshore wind projects in the state last fall. The company had seemingly promised to pay the state $300 million if it backed out of one of those projects but it then moved to keep the money, setting off months of negotiations and legal posturing before a settlement was announced in late May by the governor’s office and the Board of Public Utilities.

But the state’s Division of Rate Counsel, an independent agency meant to protect ratepayers, said in a letter made public on Wednesday that it should have been invited to settlement discussions but was not. That has two implications — it could have hurt the state’s bargaining position leading up to the deal and also leave Orsted vulnerable to future litigation from the rate counsel the settlement is meant to prevent.

The watchdog said that because it was left out of the discussions it is not a party to the settlement, and “reserves all rights to bring any action” it deems appropriate. Brian Lipman, the head of the division, told POLITICO he doesn’t know what kind of legal action he would take, but nonetheless is concerned about the process the BPU appears to be using. As the letter from his office notes, it’s unclear how the issue was resolved “without it ever appearing on the board’s agenda for an open meeting.”

Lipman also said that if he had been involved in the negotiations, there would have been three parties at the table — Orsted, state negotiators and Lipman’s office, two of whom would presumably be trying to get more money from Orsted. “Maybe having another party there demanding more money would have helped,” he said. The state, after all, got only about a third of the money Murphy said the company had promised the state. Still, the ratepayer watchdog letter was clear it “does not object” to the terms of the deal.

A spokesperson for the BPU referred questions about the rate counsel’s letter to the state Attorney General’s Office, which had no comment. It is unclear if the BPU considers the settlement final or plans to take further board action. — Ry Rivard

COMPTROLLER FINDS FLAWS WITH CLIMATE LAW IMPLEMENTATION — POLITICO’s Marie J. French: Gov. Kathy Hochul’s administration needs to be more transparent about the costs of the state’s clean energy transition and its progress toward meeting the landmark climate law’s goals, an audit found. Comptroller Tom DiNapoli’s office released an audit of the Public Service Commission and NYSERDA’s implementation of the state’s electric sector goals on Wednesday. The audit found fault with the agencies' lack of transparency on progress, including reliance on outdated forecasts, and recommended more attention on risks to the goals.

The Department of Public Service did not provide its response to the draft audit until July 1 — the same day PSC and NYSERDA officials acknowledged New York would likely not meet the 70 percent renewable electricity by 2030 target the audit focuses on. The audit, which began in 2022, highlights concerns about implementation of the Climate Leadership and Community Protection Act, which was signed nearly five years ago by Gov. Andrew Cuomo. Environmental groups have raised concerns about the PSC considering delaying the 70 percent target by three years.

That delay is driven in part by issues the audit flags, including rising electricity demand — higher than what the state had relied on to track progress toward the goal — and cancellations of contracts for offshore wind and onshore renewables amid rising costs. “New York is moving in the right direction to transition to renewable energy, but we found better planning, monitoring of progress and timely assessment of risks by PSC is needed to achieve our ambitious clean energy goals,” DiNapoli said in a statement.

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