TO: Members of the Assembly Transportation and Independent Authorities Committee
FR: Tony Bawidamann, Vice President,Government Affairs
DATE: December 10, 2018
RE: S-2252/A-4634 – (Smith/Greenstein/Pinkin/Kennedy) –Establishes goals initiatives, and programs to encourage and support use of plug-in electric vehicles.
On behalf of our member companiesthat provide more than 1 million jobs in the state and make the New JerseyBusiness & Industry Association (NJBIA) the largest statewide businessassociation in the country, we understand the goals of S-2252/A-4634 and areconcerned about the cost of the program to the rate payer.
Electric vehicles offer New Jersey an exciting opportunity to be a leader indeveloping this new technology. In addition to the potential environmentalbenefits, playing a vital role in bringing this new technology into thecommercial mainstream could bring tremendous economic benefits to New Jersey’sinnovation-based economy.
We understand the laudable goal of the sponsors to help grow the market for electric vehicles in New Jersey. However, residents of New Jersey are continually challenged by affordability and the high cost of living here. In fact, New Jersey has one of the highest tax burdens in the country.
While we understand the Governor’s and Legislature’s vision of a clean-energy economy, we think there is a better cost-effective way to accomplish this objective. NJBIA feels that a market-based approach to creating, growing and sustaining an electric vehicle market should be done by the private market rather than funded by the rate payer. The intersection between consumers and business should drive competition that will grow the market place. The risk or cost of creating this market should not be placed on the rate payers. This legislation is asking New Jersey’s public utility ratepayer to pay for reducing the carbon footprint of the transportation sectors. Currently, the electric vehicles in the United States account for less than 2 percent of the total automobile market.
While estimates of $700 million have been floated, we believe this is a
conservative number as the costs of the rebates is $300 million in nature.
In addition, to the overall concern with the manner in which the bill is drafted, there are a few other issues that are of concern:
- The Bill S-2252/A-4634 creates a “working group” to
develop a statewide vehicle charging infrastructure plan that will establish
what charging infrastructure is needed, strategies for creating market
conditions to encourage EV adoption, and the policies, regulations and
guidelines to protect the grid and meet the goals of the legislation. The
working group will also establish public education programs and consumer
awareness campaigns to promote EVs, and other “advanced mobility solutions.
However, there is not a single representative of business or consumer interests
on this working group.
- The bill also establishes specific numbers (1,300)
regarding charging stations to be developed, even though the issue of what
infrastructure is needed has not even been studied by the working group
yet. Furthermore, the bill cites the
formation of the Energy Master Plan as a guiding document. The EMP is still being drafted and may have
suggestions to grow this market counter to those proposed in this
- The bill also, requires utilities to submit plans for the construction and long-term operation of charging stations and provides full contemporaneous recovery of their costs through a surcharge. Utilities are permitted to incorporate this into their rate base and earn profits for the life of the asset. As previously mentioned, we believe the market should drive the construction of the charging stations and should not be recovered in rate base. As you know, utilities do not operate current gas stations and they should not do so in this new market. This legislation also does not contain any protections offered in the Electric Discount and Energy Competition Act (EDECA), which if the utility sector would to be involved on some level should adhere to the provisions of EDECA.
Additionally, the private market will not be able to compete with the subsidized market of the utility sector.
- The Division of Rate Counsel is currently evaluating utility filings seeking about $10 billion of ratepayer money for what the utilities will surely argue are essential and worthy programs. New Jersey already has the 11th highest energy costs in the nation. As such, the ratepayer cannot pay bear all the costs, while New Jersey tries to maintain affordable electric rates.
Furthermore, section 10(h) allows “electric
public utilities may propose other programs, incentives, tariffs, or
initiatives to support the development of vehicle charging infrastructure of
all types, consistent with…” and lists may of those areas. NJBIA feels this section should be removed as
it remains very open ended and the utilities can essentially recover costs in
rate base for unneeded programs.
This bill currently takes money from the Societal Benefits Charge and uses it to pay for vehicle rebates. This is not an appropriate use of such funds, as it is a non-utility program. As such, we suggest other funding sources be used to fund the vehicles. NJBIA recognizes that reducing the carbon footprint of the transportation sector of New Jersey’s economy is an essential part of meeting the state’s ambitious clean energy goals. However, New Jersey’s public utility ratepayers should not be asked to shoulder the cost of reducing the carbon footprint of the transportation sector. We cannot continue to charge ratepayers for these extra costs and still expect businesses to stay in this state or expect their customers to be able to afford to live here.
It should not be government’s role to create a market for products; the market should be created by a concept of supply and demand, ultimately promoted by business.
In current form, NJBIA cannot support Bill S-2252/A-4634 unless the businesses who will profit from the marketplace accept the risk for this venture not the ratepayer.
It is imperative that you consider New Jersey’s affordability as a public policy goal that is as important in its own right.