How Will NJ Natural Gas Rate Hikes Affect Clean Energy?

NEW JERSEY — While New Jersey is committed to having a 100 percent clean energy economy by 2050, consumers are currently paying for subsidies on their bills each month for things like building up solar and transitioning transportation to electric. But with gas bills set to increase by as much as 25 percent while consumers are already paying more for pretty much everything, what will happen with these subsidies?

The cost of all the subsidies adds up to more than a billion dollars, according to NJ Spotlight News. Low natural gas prices have kept bills low, but the upcoming increase along with the potential for added subsidies as NJ furthers its clean energy goal means that things could change.

"That was all well and good while commodity prices were going down. Now commodity prices are going up," New Jersey Division of Rate Counsel Director Brian Lipman told the outlet. "You are going to see significant costs for offshore wind, EVs (electric vehicles), for the infrastructure."

This could mean that the New Jersey Board of Public Utilities would have to find different ways to fund the programs.

Lipman told the outlet that using ratepayer funds is not the only way the state could fund clean energy projects. Involving the private sector is one option, or perhaps scaling back the scope of projects - an unlikely option, considering Gov. Phil Murphy's recent order increasing NJ's offshore wind energy goal to 11,000 megawatts by 2040.

An August 2022 study estimated that the state transitioning to renewable energy would cut utility rates for most consumers below 2020 levels.

But the study did not consider capital costs from the transition or costs related to the subsidies.

Savings would not be universal, and low-income residents are likely to shoulder the costs.

"Low-income customers often spend more of their annual household budget on energy needs and historically have less opportunity to participate in clean energy solutions," Ben Witherell, the Board of Public Utilities’ chief economist said previously, according to New Jersey Monitor. "It’ll be important for the board to expand existing programs designed to assist low-income customers and to create new opportunities — like community solar, for example — to ensure all New Jerseyans can benefit from the transition to 100% clean energy."

"Ratepayer funds are not the only way to fund all the things we want do," Lipman told NJ Spotlight News.