More News:

July 03, 2023

New Jersey considers tax incentive bill to spur construction of offshore wind turbines

The legislation is making its way through Trenton with many opponents focusing the unproven impact of wind farms on marine life

For the past year, critics of New Jersey Gov. Phil Murphy's long-fought effort to bring offshore wind to New Jersey have largely focused on its feared impact on whales, dolphins, and other marine life, as well as people who rely on the sea for a living or for leisure.

But since last week, critics have a new target — fast-tracked legislation that would allow the multinational companies racing to build turbines off the coast to reap millions in federal tax incentives.

Last week, they packed the Statehouse to urge legislators to block the bill, which they warned would hike rates for ratepayers and allow wind developers like Ørsted to double-dip tax incentives.

"I can't believe that I have to be here. I'm the mayor of a 4,500-person town, one-and-a-half square miles, and you guys are about to spend more taxpayer money on giving an international corporation who can't manage their own budget the ability to come in and destroy my town at the Jersey Shore and our entire tourism economy," said Point Pleasant Beach Mayor Paul M. Kanitra.

He added: "Enough is enough. I know some of you have doubts. I'm asking you to stop putting special interests and campaign donors over New Jersey residents. Stop doing the bidding with this tailor-made bill we all know Ørsted wrote themselves."

Kanitra was one of "hundreds" of people, by one committee chair's estimate, who signed up to submit their thoughts on the bill, which was up for a vote in the budget committees of both chambers.

'Ranting and raving'

Most who testified blew past their two-minute limit to explain their concerns, and many repeated familiar objections, such as offshore wind's unproven impact on whales, that had nothing to do with tax incentives.

Christopher Placitella, an attorney and environmental advocate, warned wind energy would ravage marine life, damage historic properties, hurt recreation and tourism, and increase pollution.

"Please, before you vote on this, have your staff look at the environmental impact statement," Placitella told committee members.

Such speeches prompted the Assembly's committee chair, Assemblywoman Eliana Pintor-Marin, D-Essex, to interrupt many speakers who ignored their signal to stop talking and the Senate's exasperated committee chair, Sen. Paul Sarlo, D-Bergen, to demand an end to critics' "ranting and raving" and "nonfactual" testimony.

The bill drew sharp criticism from Brian Lipman, director of the state Division of Rate Counsel, who submitted a three-page letter urging lawmakers not to act on the proposal. The division acts as a consumer advocate to protect the interests of all utility customers, and Lipman warned the bill would increase both wind developers' earnings and costs for ratepayers.

"Rate counsel is concerned that by providing the offshore wind projects with additional tax benefits, the projects could earn more than they would have if the law were not changed," Lipman wrote, urging legislators to amend the bill to cap developers' potential earnings.

Lipman also noted there has been no review to demonstrate "actual need."

A solution to the climate crisis?

Not everyone opposed it.

Officials from Ørsted and other companies denied any additional cost to ratepayers. They warned lawmakers that other states, including Maryland, Connecticut, and Rhode Island, already have cleared the way for companies to take advantage of the tax incentives, and without action, New Jersey would lose out.

Plenty of environmentalists were on board too. The climate crisis — which has caused rising sea levels, sunny day flooding, and other problems — is worse for the Shore than wind turbines, said David Pringle of Clean Water Action.

"Offshore wind is, by far orders of magnitude, the single best contribution New Jersey can provide to do our part to alleviate the climate crisis, all the health care costs and such that go along with it," Pringle said. "We need to support industry. This is a bill that's good for the environment, it's good for jobs, and we need to move it forward."

Tim Sullivan, CEO of the New Jersey Economic Development Authority, warned the Senate committee of the "competitive dynamic here."

"Other states want this just as badly or worse than we do," Sullivan said. "We are positioned to be one of — if not the — leaders, but not if we can't get our projects built. And the bill before you is critical to getting the first project unlocked and under construction and developed. There's a moment here — this is a bit of a gut-check moment. Does New Jersey want to lead? Or do we want to follow and be left out of the jobs, and economic opportunity and prosperity that offshore wind represents, particularly for South Jersey?"

The debate — coming on one of the Legislature's busiest weeks, with the June 30 deadline to approve a state budget just days away — kept legislators at their desks long past dusk as they huddled behind closed doors to hammer out a compromise.

In the end, committees in both chambers passed the bill, with the Senate amending the bill to limit it to Ørsted's Ocean Wind 1, a 1,100-megawatt project planned for 13 nautical miles off the Atlantic City coastline.

Other amendments would require Ørsted to post a $200 million cash escrow with the Board of Public Utilities to help pay for two wind projects under construction in Salem and Gloucester counties and "provide performance indicators both on the viability, constructability, and environmental impact," Sarlo said.

The vote in the Assembly committee split along party lines. In the Senate, it passed by an 8-2 vote, with Sens. Declan O'Scanlon, R-Monmouth, and Michael Testa Jr., R-Cumberland, voting no. Three senators abstained, including Sen. Andrew Zwicker, D-Middlesex.

"As someone who has been a renewable energy supporter, offshore wind supporter, both in my day job and here, this is a critically important thing," Zwicker said. "However … the impact on ratepayers in New Jersey I think needs to be looked at very carefully. That'd be true for this project, and it's true for all of our projects. We have to make sure that what we're doing is fiscally responsible, environmentally responsible, economically responsible."

The bill's prime sponsors are Sen. Bob Smith, D-Middlesex, in the Senate and Assembly members Louis Greenwald (D-Camden), Paul Moriarty, D-Gloucester, and Carol Murphy, D-Burlington.

The bill is expected to return to the Assembly budget committee Wednesday for another vote because of the Senate's amendments. It could go before the full Senate and Assembly for a vote Friday before legislators break for the summer.

This story first published by the New Jersey Monitor, a sibling site of the Pennsylvania Capital-Star. New Jersey Monitor Reporter Nikita Biryukov contributed to this story.

Pennsylvania Capital-Star is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor John Micek for questions: Follow Pennsylvania Capital-Star on Facebook and Twitter.