PA and NJ to Finalize Energy Strategies

January 16, 2008
Client Alert Newsletter Forecast 2008

Following legislative resistance to the Fund's proposed funding source (a utility bill surcharge), Governor Rendell, as part of a budget compromise, convened a special session of the General Assembly to address the Energy Independence Strategy.

In late 2007, several bills were considered in the special session, including the Alternative Energy Investment Act (SB 1) which, in December, passed the Senate with bipartisan support and was referred to the House for consideration. SB 1, in contrast to the Governor's proposal, included $650 million in initiatives and incentives funded through an anticipated growth in the state's gross receipts tax rather than a utility bill surcharge. The House will likely address SB 1 when it reconvenes in March 2008. Also this year, Pennsylvania is expected to enact legislation to implement several of the Governor's other energy initiatives. The bill(s) are expected to provide (a) grant and loan funding for clean energy projects, (b) rebates and incentives for energy-efficient home appliances and solar systems, (c) tax credits to increase alternative energy production and (d) venture capital to support emerging energy technology companies and the commercialization of emerging technology.

Across the river, New Jersey's next draft Energy Master Plan ("EMP") is expected to be released in 2008, which will present the state's long-term vision and policy choices to meet New Jersey's growing energy needs through 2020. New Jersey law requires that an EMP be issued every ten years. The EMP was last formulated in 1991 and updated in 1995, and its issuance is now reportedly delayed due to unresolved policy questions involving New Jersey's need for a new nuclear facility, the amount of generating capacity needed from natural gas and coal, and how energy efficiency and renewable energy resources will be addressed. New Jersey's implementation of the Regional Greenhouse Gas Initiative, which calls for the reduction of greenhouse gas emissions to 1990 levels by 2020, and the state's Renewable Portfolio Standard, which requires increasing percentages of all electricity sold in the state to be generated from renewable sources (22.5% by 2021), are also expected to impact and shape the proposed EMP. Following the issuance of the proposed EMP, an extensive comment period is anticipated before the plan is finalized.