The Jersey City Independent "

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Editor’s Note: A slightly different version of story was first published last week by NJ Spotlight, a new nonprofit news website covering state issues. Be sure to bookmark, RSS or otherwise make a habit of checking out the work done by our new colleagues.

Scott Schultz celebrated his 55th birthday by showing up at an Iselin office on May 3 to file some applications for New Jersey’s Clean Energy program. When he arrived at 8 am that stormy morning, there were already more than 20 people there, some of whom had camped overnight.

They were there because the Christie administration has diverted more than $400 million in funds from clean energy programs as part of its efforts to balance the state budget. This has led many small solar businesses to question whether there will be enough funding to finance their projects, which rely on rebates to fund financing packages that convince residents and businesses to install solar panels.

By the end of the day, they were proved prescient. The state had received more than 1,000 applications, exhausting the $7.5 million in funding earmarked for the program’s next three months in a single day.

“I got my applications in, but it doesn’t mean they will be funded,” says Schultz, who works for Advanced Solar Products in Flemington. “What they did was create a rush in the marketplace.”

No Applications Accepted

The state announced last week it will not accept any new rebate requests until September, throwing a substantial portion of the solar energy market into turmoil. Because of the diversion of funds, the state Office of Clean Energy had to scale back New Jersey’s aggressive clean energy and energy efficiency programs.

The administration’s cuts also led to the elimination of 29 energy efficiency and renewable energy programs run by the office, according to a lawsuit challenging the diversion of funds from a trade group representing solar power dealers. The group is contesting the administration’s diversion of $158 million in clean energy funds to help plug a hole in the current state budget.

The Mid-Atlantic Solar Energy Industries Association filed the lawsuit in the appellate division in Trenton seeking to prevent the funds from being allocated for general budget purposes, arguing the money was specifically dedicated by law to fund energy efficiency programs and renewable energy projects.

The suit, filed by the Princeton law firm Potter & Dickson, argues there is no role for either the governor or the legislature in setting the levels of clean energy funding because a law deregulating the energy industry passed in 1999 specifically delegated that job to the state Board of Public Utilities, which funds the programs through a special surcharge on utility bills called the societal benefits charge.

“It is also no minor matter that utility ratepayers who think their SBC payments are helping to achieve public policy goals, such as energy conservation, are now being deceived, as a significant portion of those payments is now just another tax that goes into the general fund,” the lawsuit reads.

The nonpartisan Office of Legislative Services seems to agree in part with the trade group, having issued an opinion arguing the governor cannot divert money from the Clean Energy Fund without legislative approval since the fund was created by statute.

The administration has redirected more than $400 million in various clean energy funds, including the $158 million cited in the lawsuit, steps that have angered clean energy advocates and lawmakers alike. The cuts forced the state to temporarily shut down the rebate program for solar dealers, who mostly cater to residents and small businesses. When it reopened earlier this month, it exhausted all of the money slotted for the quarter in that same day.

‘Panic in the Streets’

“There’s panic in the streets,” says Advanced Solar president Lyle Rawlings, who is also president of the trade group. It was evident when the Office of Clean Energy opened the program up for new applications on May 3 at Conservation Services Group offices in Iselin. “People were waiting up to four hours and some of them didn’t get approval,” he says.

Solar energy advocates pushed for more money for the rebate program at a May 11 with Michael Winka, director of the Office of Clean Energy. But Winka told them they could not expect the budget to be increased given the state’s budgetary problems.

Dolores Phillips, executive director of the trade group, says the cuts would particularly hurt small businesses that install solar panels on homes and businesses, because their model relies on rebates and not financial instruments known as solar renewable energy credits (SRECs).

The larger solar vendors have created profitable businesses based on the SRECs, which are selling for more than $600 on the spot market. The credits are more attractive to large businesses and manufacturers with better access to the capital needed to finance solar projects.

The solar cuts are part of the governor’s Feb. 11 executive order, which argued that the state was “confronting an unprecedented financial crisis affecting all levels of government,” and that New Jersey was facing a $2.2 billion shortfall in the current fiscal year, which ends June 30. Michael Drewniak, the governor’s press secretary, declined comment when asked about the lawsuit.

The administration already has suffered one setback on another executive order issued by Christie this year, with an appeals court ruling on May 7 that his order restricting political donations from public employee unions “must be pursued through legislation” instead of executive order.

The situation has revived questions about the state’s policies dealing with solar energy, according to Matt Elliott, clean energy advocate for Environment New Jersey. The state has been cited for several years as a national leader in solar development, along with California. But advocates like Elliott are concerned that might be changing under the new administration.

“The governor has created uncertainty in New Jersey’s successful clean energy market, causing solar companies and efficiencies contractors to question its commitment to clean energy,” he says.

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