Remember Costly EDECA?

EDECA is 1999's NJ law called Electric Discount and Energy Competition Act.  Let’s examine some significant EDECA Provisions.

Basically it unbundled electric and gas rates, i.e. electricity supply, and later gas supply, are separate from physical delivery over wires or thru pipes; they are now two separate charges on everyone’s bill.  This allowed for retail Energy Choice in NJ, which was a huge government and private campaign when it first started in 2000. 

(Note:  in 1999 the average residential (RS) rate was 11.4 cents per kWh (combined); now it’s 16.57 cents combined. In other words, energy prices in NJ have increased 29% since 1999.  This is slightly lower than the average Inflation Rate of 2.72% per year.  However, inflation isn’t the real reason why energy costs have risen in NJ; it’s mainly because of the added costs of EDECA.

What are these added costs? Think of it in terms of 3% added to your utility bill each month.

1) EDECA required mandatory 10% electric rate reduction over 4 years (there has been cost control at least).  In the first year of EDECA, there was a 5% price decrease, so everybody just loved that. After that, price decreases ended.

2) It mandated that Utilities must provide basic generation service (BGS); or basic gas supply service (BGSS); as “provider of last resort” – in other words, energy availability is guaranteed to all New Jerseyans.

3) Subject to BPU approval, electric utilities were required to either functionally separate generating assets, i.e their power plants from their supply business, or divest them - which they all did – the four NJ major utility companies no longer own generating stations, i.e. power plants, except PSEG’s nuclear plants).

4) EDECA established a Societal Benefits Charge (SBC) on your monthly bill that includes 6 charges, and 1 hidden charge. They are: 

a) Social programs like COOLAdvantage and WARMAdvantage, which are rebates for things like air conditioners and heaters, for example. All these programs are administered by the NJBPU’s office of Clean Energy.  Have you gotten a rebate yet?,

b) Nuclear decommissioning costs (i.e. the billions of $ to close old plants like Salem),

c) Demand Side Management (DSM) programs, which pay big commercial customers to turn down their power usage in peaking events – i.e. when blackouts might occur otherwise; also it mandated $256 million/year for past commitments and new programs –for eight years - which has actually been much more, and has been ongoing,

d) EDECA included Manufactured gas plant (MGP) remediation costs, i.e. cleaning up inactive industrial waste disposal sites.  I couldn’t find out how many we have in Jersey, but it’s as high as 5,000 nationwide,

e) It provided consumer education (mostly about OCE, Energy Choice and energy conservation or efficiency),

f) It included a Universal Service Fund charge, i.e. a subsidy to low income customers, and finally, a hidden cost, the cost of running the Office of Clean Energy.  All these costs are contained in everyone’s SBC charge every month.  

5) EDECA established a mechanism for recovery of stranded costs (i.e. the costs to build and operate the power plants the utilities had already built). It said that stranded costs may be recovered through transition bonds (which are secured by an irrevocable obligation of ratepayers to pay off over 15 years). You dear friend, are the ratepayer. “Stranded costs” are original costs borne by the utility to build power plants, or to buy energy supplies in the new EDECA model, and provide power thru delivery lines.

6) EDECA had gas and electric supplier licensing requirements (which are very, very low, in my opinion).

7) Most importantly, EDECA had emission disclosure and portfolio standards, i.e. Generating plants and suppliers must disclose how they produce their power, whether from coal, gas, nuclear etc.  and, the State legislature made minimum required Renewable Portfolio Standards that utility companies must meet each year, for example, the current RPS requires nearly 8% of total generation to be Class I or Class II Renewables, e.g. solar, biomass, wind, landfill gas etc., and

8) EDECA had distribution reliability standards, i.e. the “grid,” which you’ve heard mentioned I’m sure, is composed of high tension transmission lines (which you see many places, especially along the NJ Turnpike), with substations and equipment etc. to transfer and deliver electricity all around the state, and it must have 99.9% reliability.  

All these things in fact, cost a lot of money and add to your monthly gas or electric bill. The sad part is, that in our legislature’s wisdom, all these added costs (3%), DON’t get shown on your monthly bill, including the 7% sales tax! But that will be another story coming soon.