New Jersey must work with PJM Interconnection and FERC to ensure a reliable supply of energy and capacity at reasonable rates while advocating for policies that help control electricity costs, maintain system reliability and adhere to environmental objectives, according to the state’s final 2011 Energy Master Plan.
New Jersey is opposed to a FERC-imposed paradigm that hinders in-state generation development while simultaneously imposing on ratepayers an investment premium for transmission projects that import power from out-of-state generation sources far from the state’s loads, according to the plan.
“FERC’s adoption of incentive rate treatment for non-routine interstate transmission facilities must not become routine because it unjustifiably rewards transmission companies for simply being mindful of necessary system upgrades,” the plan said.
The state will continue to participate in and, as appropriate, challenge PJM’s transmission system planning and wholesale market design processes and rules. New Jersey should also evaluate ways to modify reliability pricing model rules to produce more equitable capacity price results across the region. “New Jersey residents should be protected from paying premium capacity prices – averaging $1.4bn annually – while seeing very little of the anticipated new generation capacity that would modernize the current resource mix in New Jersey,” the plan added.
PJM’s current transmission interconnection process stifles approvals for interconnection and imposes unreasonable costs on merchant generators, the report said. Generators seeking interconnection enter a queue defined not by project viability, but by the date of the interconnection request. “The state is committed to rationalizing this process through PJM and FERC approval of a queue breakaway mechanism that would allow viable generation projects to advance in the queue based upon the state of their actual development and in-service date,” the plan added.
Another challenge is that transmission upgrade studies are done by the transmission owners, which may have generation affiliates in direct competition with the merchant generator requesting interconnection. “New Jersey is committed to having independent third parties with no vested interest in impeding project development and ultimate interconnection, perform interconnection studies and necessary transmission upgrade cost estimates,” the plan added.
Projects in the works
The plan noted that since PJM determined that new transmission was required to serve northern New Jersey, Public Service Enterprise Group (NYSE:PEG) subsidiary Public Service Electric and Gas, along with PPL Corp. (NYSE:PPL) subsidiary PPL Electric Utilities, developed the 500-kV Susquehanna-Roseland transmission project.
While New Jersey and Pennsylvania state regulators approved the line in February 2010, PSE&G and PPL said the line will not be in service until June 1, 2014, and perhaps later due to permit delays related to a 1.65-mi line segment requiring National Park Service approval. The National Park Service has said the review will be completed no earlier than January 2013.
The best estimate for the in-service date of the New Jersey portion of the project is June 2014 for the eastern portion between Roseland and Hopatcong, and June 2015 for the western portion between Hopatcong and the state border. PPL is targeting an in-service date of April 2015 for the Pennsylvania portion of the line.
“To hedge against uncertainty about the timing of new transmission, uncertainty about load growth and generator retirements, New Jersey should continue to encourage the development of new generation that meets the economic, environmental, and reliability goals set forth in this [plan],” the plan said.
Another project in the works is the 660 MW Hudson Transmission Project, which has encountered market-related delays and has an uncertain completion date. If built, the project would link New Jersey with mid-town Manhattan, and will require $172m in PJM transmission upgrades to support the project’s firm withdrawal rights of 320 MW. However, the transmission upgrades to ensure grid security and stability objectives in New Jersey are not designed to protect New Jersey ratepayers from economic consequences, according to the plan.
Energy efficiency, demand response and the smart grid
Providing reliable service requires substantial investment in generation, transmission and distribution infrastructure, the plan said. It may be more cost-effective to reduce electricity use during peak hours instead of investing in conventional supply chain infrastructure to serve peak demand.
Various ways to address peak demand growth include energy efficiency, building new generation and expanding demand response. ”Peak shaving” makes the use of transmission and distribution systems more efficient.
Among other things, the plan said one of the most straightforward ways to store energy is in a spinning flywheel where electrical energy is converted into the kinetic energy of rotation by running it through a motor/generator, which accelerates the flywheel. When energy is needed, the flywheel’s motor/generator converts the kinetic energy of rotation into electrical energy. “In conjunction with New Jersey’s support for offshore wind, New Jersey should monitor the technical and commercial developments that may support the installation of flywheels to promote grid reliability objectives in response to increased wind penetration in New Jersey.”
The plan also said New Jersey expects that smart grid technology will be an integral part of the energy balance throughout the state. Indeed, the state is involved in a smart grid demonstration project in the Jersey Central Power & Light (JCP&L) service area, which involves a two-way communications network that enables JCP&L, a FirstEnergy (NYSE:FE) company, to monitor available load for control and to measure load reductions associated with central air conditioning systems.
Currently, all customers in New Jersey with demand of 1,000 kW and above have interval meters that store power use data at regular intervals and two-way communications that support dynamic pricing. “New Jersey should continue to monitor smart metering technology advances in the broader context of gauging the increased market potential of smart grid technology,” the plan added.
According to a Dec. 6 statement, after the draft 2011 plan was released in June, the state Board of Public Utilities hosted several public hearings and assembled technical working groups designed to solicit more specific recommendations on clean energy funding, alternatively fueled vehicles, innovative technologies and biomass.
“This final adopted energy master plan demonstrates the administration’s firm commitment to change the way energy is produced, distributed and used as part of our broader emphasis on driving the development of cleaner and renewable sources of energy to spur business and economic growth throughout the Garden State,” Gov. Chris Christie said in the statement.