Good morning President Fox and fellow BPU Commissioners. I am Michael Egenton, Vice President of Environment and Transportation for the New Jersey State Chamber of Commerce ("State Chamber"). We appreciate the opportunity to provide our input on the Energy Master Plan ("EMP").

Since 1911 the State Chamber has been recognized as the independent voice of business in New Jersey. With a broad based membership ranging from the Fortune 500 companies to small proprietorships, representing every corner of the state and every industry, our members provide jobs for over a million people in New Jersey. We continue to work towards streamlining the regulatory process while striving to maintain the economic vitality of our members.

The EMP sets very aggressive goals in its blueprint for New Jersey's energy future. The five major goals set out in the Draft Plan are:

• Maximize conservation and energy efficiency;
• Reduce peak electricity demand;
• Meet 22.5% of the State's energy needs through renewable sources;
• Developing new low carbon-emitting power plants; and
• Investing in innovative, clean energy technologies to stimulate economic growth, while at the same time, meeting the challenge of not only New Jersey's, but also this country's energy situation.

Throughout the discussion we have heard a consistent message - that there is no single approach, no silver bullet, to address these issues. That means all options must be considered - conservation and efficiency, new supply - including renewable energy, traditional fossil and nuclear generation and transmission sources. All of these options have a place in the portfolio of energy sources at our disposal.

There are a few issues of critical importance to the State Chamber as we evaluate the EMP - a reliable supply of energy, at a reasonable price that can help foster a competitive stance for our State's businesses and citizens and meets NJ's tough environmental considerations and a level of certainty and predictability in policy and permitting.

Renewable energy sources, primarily wind and solar for New Jersey, have a significant role in helping to meet these challenges. Their ability to produce clean energy must be balanced against intermittent nature and high cost - much higher than traditional power sources.

PJM, the regional transmission organization responsible for ensuring the reliability of the high voltage electric power system in our area, has determined that the reliability of our supply of electricity will be jeopardized over the next several years, unless steps are taken to address the state's electricity demand and supply. Since PJM is responsible for planning and operating the transmission grid reliably, it is in the process of directing upgrades to the grid that will enable New Jersey to import more electricity. New Jersey currently imports about 25% of its electricity needs annually. The Draft Plan seems to view new transmission as a conduit for "dirty coal" power as opposed to a critical piece of maintaining a reliable electric system and we suggest that the plan consider a more balanced perspective in the final version.

Nuclear power represents a proven technology. There are more than 100 nuclear power stations in the country. It is THE commercially available carbon-free source of energy. Other countries, such as France produce 80% of their power from nuclear sources, but only about 20% in the United States. The State Chamber believes that any reasonable State energy plan should preserve the nuclear option.

Early EMP draft documents released in October 2006 included a discussion of "reasonable rates and price stability" objectives that suggested New Jersey per unit electricity prices should stay within 5% of a regional average, including New York, Pennsylvania, Delaware, Maryland and Washington, DC. While this is a clear indication of the Administration's concern over the impact of price increases on New Jersey's economy, it is a great unknown. We suggest that the final EMP include an analysis that focuses on the cost of implementing these strategies.

The State Chamber supports an Energy Master Plan that focuses on improving energy efficiency, increasing renewable and nuclear energy sources and the creation of "green jobs".

What is clear is that energy as we know it is changing rapidly and the businesses in New Jersey must be given the opportunity to change in these times. Renewable energy sources with the right state incentives and tools can power our businesses into a sustainable and profitable future.

With that in mind, I want to take the opportunity to highlight some of the specific energy sectors and projects our organization believes must be "on the table" as the State of New Jersey prepares for the energy needs of the business community and residents in the outlying years:

NUCLEAR

Nuclear power is the most vital source of baseload electricity in the State of New Jersey. In 2006, New Jersey's four nuclear power plants generated approximately 32,600 gigawatt-hours (GWh) of energy, supplying the state with 54% of its power. In addition, nuclear power produces virtually zero carbon emissions, unlike other baseload sources such as coal, oil and natural gas. This fact alone makes nuclear the best contender to increase energy supply while simultaneously meeting national and statewide greenhouse emission reduction goals.

New Jersey's government has laid very aggressive goals under its Energy Master Plan, which calls for increased energy efficiency, reduced peak demand, investment in renewables, and most importantly, the development of new baseload power sources that compliment our State's goal to reduce carbon emissions 20% by 2020. While investment in renewable energy is an exciting part of our State's energy future, they are not baseload sources of supply. In the mean time, nuclear energy is the established, secure and reliable energy supplier that can meet current needs and easily match increases in demand if developed correctly.

For the business community especially, more investment in baseload nuclear power will be crucial in meeting demand increases and negating related rising costs. Currently, 64% of New Jersey's electricity is consumed by the combined commercial and industrial sectors. Therefore, it is these ratepayers that will be most affected should new generation fail to come online. The nuclear plants in New Jersey are also vital to the State's economy, especially in their local regions. In addition, a new facility could generate anywhere from 400 to 700 jobs, bringing with it much-need economic stimulus. In order to keep costs down, increase supply, and reduce our carbon footprint on the residential, commercial and statewide level, it is critical that existing nuclear sites stay in operation and that the development and construction of new nuclear generation facilities is adamantly encouraged within New Jersey.

LNG

Liquefied natural gas is natural gas that has been converted to liquid form for ease of storage or transport. The State Chamber believes the following three projects are critically important to our State's energy needs:

Crown Landing: The Northeast has one of the highest growths in demand for consumption of natural gas in the U.S. Because of seasonal demand ups and downs, this part of the country experiences high price volatility and increasing supply challenges. It is also a long way from the Gulf of Mexico where most of the natural gas for this area originates. As demand grows, constraints on this long-distance pipeline system become a critical choke point.

Crown Landing plans to bring natural gas that has been cooled to a liquid (liquefied natural gas or LNG) and regasifying it so that homes, electricity plants and industry in the region have access to a reliable supply. Turning natural gas into its liquid form is the most efficient way of transporting it over long distances because its volume is reduced by a factor of 600. In this way, the energy can be transported from where it is found to where it is most needed. Once the LNG reaches the area, it needs to be slightly warmed to convert it back to a gas, and then transported by pipelines to consumers.

The receiving terminal will be located adjacent to the Delaware River in Logan Township, NJ. LNG will be transported up the Delaware River to the terminal by specially designed ships that will safely handle the low-temperature, ambient-pressure, cargo.

The presence of Crown Landing offers significant benefits to the community. Specifically, by locating a LNG terminal in southern NJ, this area will benefit from:

• increased energy security for the entire region through reliable access to cleaner burning natural gas;
• several hundred multi-year construction jobs and ultimately about 50 full-time jobs for the long-term operating life of the facility;
• payroll and property tax revenues to the area for the 40+ years this facility will be in service and;
• clean energy growth which has the potential to attract further investment and growth.

Upon completion, Crown Landing will have a daily send-out capacity of 1.2 billion cubic feet, enough natural gas to supply the daily needs of about five million homes. The terminal will be able to connect to three major natural gas pipeline systems serving the Northeast.

When built, Crown Landing will be the most modern facility of its type in the United States. Every aspect will be designed to stringent technical and safety standards - meeting or exceeding all current regulatory requirements. Additionally, intensive health, safety and environmental training will be required for all staff associated with the operation.

BlueOcean Energy: is a floating liquefied natural gas (LNG) receiving terminal that will create a gateway to global supplies of clean-burning natural gas to help meet the needs of New Jersey and New York. The project will have the capacity to supply 1.2 billion cubic feet of gas per day, enough to meet the needs of 5 million residential customers. Anchored about 20 miles off the New Jersey coast, the terminal will be away from shipping lanes and recreational areas and not visible from the shore line.

The project will generate sizeable direct and indirect economic benefits through project spending, new jobs, taxes and additional natural gas. Access to global supplies of natural gas can improve reliability, help reduce swings in natural gas prices and fuel future growth. New supplies of clean-burning natural gas can help reduce air emissions and improve air quality, including a reduction in the need for new, coal-fired power generation. The project is in alignment with the goals of the New Jersey Energy Master Plan.

Liberty Natural Gas: will deliver natural gas from 15 miles offshore through an underwater pipeline to existing onshore pipelines to the New Jersey and New York area.

Liberty Natural Gas will create a safe, low-profile pipeline link to reliable, economic global supplies of clean-burning natural gas and will help meet the region's growing energy needs.

The Liberty project has planned with care for the environment - with no construction of any major port or storage facilities on or offshore. Liberty's submerged turret system is located in water over 100 feet deep, and connects with shoreline construction methods to a buried pipeline in an established industrial corridor.

The technology proposed for Liberty Natural Gas is already in use outside Boston and the Gulf of Mexico. Liberty's offshore conversion and delivery system offers exceptional benefits. Liberty Natural Gas can begin serving up to 2.4 billion cubic feet a day to the New Jersey and New York areas as early as the end of 2011.

ENERGY-FROM-WASTE

Currently, Energy-from-Waste or waste-to-energy facilities account for nearly 20 percent of all renewable electricity generation in the United States. The draft New Jersey Master Plan properly advocates the expansion of the Energy-from-Waste industry. We applaud New Jersey's progressive approach to reduce green house gases while providing a renewable source of energy through Energy-from-Waste. This is a proven technology for reliable, sustainable and clean energy at a reasonable price.

Today's Energy-from-Waste facilities are highly efficient and clean power plants that utilize municipal solid waste as their fuel rather than coal, oil or natural gas. Far better than expending energy to explore, recover, process and transport the fuel from some distant source, Energy-from-Waste plants find value in what others consider garbage. According to the U.S. Environmental Protection Agency, the nation's 89 waste-to-energy plants produce electricity with "less environmental impact than almost any other source of electricity." In the EU, Energy-from-Waste is one of the ways that they are meeting their Kyoto Treaty obligations because Energy-from-Waste eliminates methane gas (the worst Greenhouse gas) from landfills.

To further the goal of providing reliable, sustainable and clean energy at a reasonable price, the New Jersey Energy Master Plan should also recognize Energy-from-Waste as an eligible greenhouse gas offset technology and it should be eligible for greenhouse gas credits. The State should calculate Energy-from-Waste's net emissions when conducting its greenhouse gas inventory in order to appropriately recognize these facilities as net greenhouse gas reducers. Finally, the State should include Energy-from-Waste in Tier 1 of the renewable portfolio standard.

Biomass: is a renewable, low carbon, sustainable fuel. Biomass fuels generate lower levels of such atmospheric pollutants as sulphur dioxide. Modern biomass combustion systems are highly sophisticated, offering combustion efficiency and emission levels comparable with the best fossil fuel boilers.

One of the greatest benefits of energy from biomass is that most of the technologies are making use of waste products. For example, landfill gases can be used to generate electricity, thereby preventing the methane from escaping directly into the atmosphere. By burning the gases, it helps reduce odors and the release of potentially harmful or toxic substances in the landfill.

SOLAR

Solar energy-power from the sun-is clean, renewable and sustainable, helping to protect our environment. Solar energy systems are virtually maintenance free and can last for decades. One simple, obvious use of sunlight is to light our buildings. If properly designed, buildings can capture the sun's heat in the winter and minimize it in the summer, while using daylight year-round.

Unfortunately, due to the high initial capital cost of solar PV systems, they do not represent a simple, cheap or low-risk solution for business owners who desire to manage their energy costs through rational business decisions. In consequence, without an incentive program to help offset the up-front capital cost barrier, the wide-scale adoption of on-site solar power generation will not occur.

The State Chamber supports the transition of NJ's solar program from a rebate incentive system to a performance based Renewable Energy Certificate market. This fiscally responsible approach to the market creation will lead to the attainment of the realistic goals of 2.12% electricity delivered from solar sources by 2020.

We believe that the existing program, enabling commercial and industrial business owners to take advantage of on-site solar electricity production, does help to address the challenge of the initial high capital cost of such systems. In addition to assistance for direct-purchase, this incentive program also provides for third-party owner-operator financing of systems through the Power Purchase Agreement (PPA) structure. The PPA structure enables non-profit organizations, municipalities and public schools to access the benefits of solar power while a third party bears the financial costs and risks associated with the finance, construction and operation of the solar energy asset. It also allows these non-profits to indirectly take advantage of federal and state tax incentives.

This program has been well designed over the past many months, and is in the process of a smooth execution. As with the implementation of all programs however, the devil is in the details. We suggest this program be set up with minimum ongoing government intervention.

WIND

Wind energy makes sense for businesses in New Jersey - wind energy is renewable, it's clean, it creates green jobs and it saves money. We simply only need to turn to the success of the first wind farm (and the first coastal wind farm in the United States) located in Atlantic County, NJ.

Wind energy at the Atlantic County Utilities Authority has been one of the most successful projects in the company's thirty-year history. The project produces approximately 19 million kilowatt-hours of emission-free electricity per year, which is enough emission-free energy to power over 2,000 homes. The electricity is used by both the Atlantic County Utilities Authority Wastewater Treatment Plant and delivered to the regional electric grid. The project has saved the ACUA money and created an education hub near Atlantic City that is visited by thousands annually.

Since the 7.5 megawatt Jersey-Atlantic Wind Farm (JAWS) was commissioned in January 2006, the ACUA has saved more than $1.3 million in energy costs. The savings come from a fixed-rate power purchase agreement with the farm's owners; zero transportation costs on the electricity purchased; and lease income for the turbine sites. The savings realized by the ACUA are direct savings to their customers. All businesses in New Jersey should have this competitive advantage.

New Jersey has the opportunity to develop smart metering and real-time energy prices for businesses and residential customers. This technology should be pursued and coupled with wind production. Smart meters will allow customers to manage energy consumption and match demand with prices - ultimately increasing demand during periods of high wind production and reducing demand during low wind production.

Because of the potential wind energy has to offer, the State Chamber encorages the development of additional wind farms and further suggests the involvement of our local and regional chambers of commerce when such projects are under consideration.

OTHER RECOMMENDATIONS

The State faces an urgent and growing need for more in-state generating capability. Many of the generating facilities now operating in NJ are aging, and will probably be retired during the 2008-2020 timeframe on which the plan focuses, which will only exacerbate the state's looming power shortage. The EMP should encourage aging power plants to modernize and where possible expand their generating capacity through the use of state of the art technology for utilizing fossil and renewable fuels and energy sources.

As NJ's fossil-fueled electric power generators reach the end of their designed life, they should be encouraged to replace their outdated boilers with state-of-the-art technology that simultaneously improves their operating efficiency and their environmental performance, thereby preserving and even enhancing the state's current portfolio of power generators. The State should encourage and facilitate such modernization programs, especially when they increase generating capacity while at the same time lowering the intensity of carbon emissions and reducing emissions of pollutants through the use of state-of-the-art technology and Best Available Control Technology.

To facilitate achievement of the EMP's ambitious renewable portfolio standards, the state should encourage and provide incentives for the modernization and repowering of existing fossil-fired generators to include the use of renewable fuels, as well as other alternative fuels that provide environmental benefits through reduced air emissions.

Finally, our utilities need to be involved in education and outreach efforts as they are uniquely positioned to convey both the technical and practical aspects of how energy efficiency affects customer costs, as well as the need for future infrastructure and generation investments in New Jersey.

The State Chamber appreciates the opportunity to comment and respectfully requests that our views be given proper consideration.

Click here for more information on the state's Energy Master Plan.

July 2008