New Jersey Propane Suppliers Call for More Disclosure & Consumer Choice

Just as the state of New Jersey is taking its first significant steps to implement its Energy Master Plan (EMP), several associations and coalitions, including the New Jersey Propane Gas Association (NJPGA), have launched campaigns to educate consumers about the EMP’s hidden costs, consumer mandates and likely constraints on energy supplies.

This month, the state’s Department of Environmental Protection is set to adopt new regulations to mandate the replacement of large, fossil-fueled boilers with electric boilers in commercial buildings. The mandate is estimated to cost four to five times more to heat a building with electricity compared to fossil fuel.

And those estimates do not account for upfront conversion costs that could run into the millions per building. Nor do they account for significant costs for utility infrastructure that could be needed to supply large-scale conversions.

What seems attractive now with no price tags will be bought at enormous expense, according to NJPGA, at a time when families and businesses can least afford it. And, according to the Master Plan, consumers won’t have choices.

The state’s electrification mandate for commercial buildings is a precursor to its stated intent to force electrification and eliminate fossil fuels for nearly every application, including space heating and water heating, cooking, industrial and recreational uses. The same mandates would likewise apply to schools and other public buildings. Those costs would ultimately be borne by local taxpayers who are mostly unaware of the looming impacts on household budgets.

“This is why we organized our campaign earlier this year,” explained Henry Papiano, NJPGA president and president of C Three Logistics LLC, a propane transporter based in Newfield, New Jersey. “Consumers and business owners have been kept in the dark about what this will mean to their checkbooks, and the state is in no hurry to tell them. We believe it’s our obligation to do so.”

NJPGA’s education campaign, called “Propane Is Jersey Freedom,” highlights the impending costs and dictated mandates of the Energy Master Plan. Through a series of strategically located billboard messages, online ads, media outreach, opinion editorials and business-owner interviews, NJPGA and others have raised the profile of the EMP’s issues.

NJPGA’s point is that the Energy Master Plan literally hits home; it’s much more than an abstract goal. The EMP calls on homeowners and businesses to replace their oil, natural gas or propane heating equipment with an all-electric system, preferably heat pumps or
electric boilers.

Such a conversion can cost about $20,000 per household, according to some estimates. And operating costs are so much higher for electricity than for fossil fuel, owing to New Jersey electric rates that are among the highest in the nation.

National and international news have more recently documented energy shortages, including prospective blackouts as a result of closed fossil-fueled power generation, limited pipeline capacity and constrained energy exploration.

In recent years, New Jersey policymakers have hastened the shutdown of a nuclear power plant, despite that same plant’s zero carbon emissions and federal re-licensing a few years earlier. The state applauds the shutdown of coal-fired power plants and boasts of its opposition to gas pipelines that were ultimately cancelled, even after federal approval.

In effect, policymakers have voluntarily closed, delayed or helped to cancel existing or planned capacity, while the wished-for, greener renewables remain a distant, expensive and less-reliable vision. “Meanwhile,” Papiano contended, “consumers are starting to pay the price for government’s hostility toward energy sources that consumers choose and that work — including propane.

“We’re already seeing adverse consequences in New Jersey and elsewhere, because the state wants to eliminate clean fuels like propane in favor of renewables that won’t be ready for many years, if ever,” said Papiano. The inevitable result, he said, is less energy at higher prices.

NJPGA cites a few recent examples. In August, the New Jersey Board of Public Utilities (BPU) approved natural gas rate increases for the state’s gas utilities ranging from 15% to 24%, starting this fall. In neighboring New York, a major gas utility notified customers to expect a 39% increase in their winter heating bills compared to last year, and 64% more for their electric bills.

And in Massachusetts, electric bills are expected to jump 64% this winter owing to constrained gas supplies, limited pipeline capacity and higher demand. In New Hampshire, electric bills will soar 75% to 78%.

These rate hikes are mostly just for the energy itself, not the utilities’ operating and capital costs, or the costs of windmills and solar panels, or the cost of building out the electrical grid to reliably accommodate electric heat pumps, boilers and cars. Those costs will come later and are not addressed in New Jersey’s Energy Master Plan.

Nor were they addressed in a state consultant’s cost assessment of the EMP, accepted by the state’s Board of Public Utilities in August. That study, by the Brattle Group, relies on key assumptions and omissions to suggest, erroneously, that the EMP will cost consumers only a little bit more, compared to their current energy bills.

Yet, by their own admission, the study omits any discussion of capital costs for equipment conversions, building retrofits and other “upfront” costs. These costs are huge for all classes of customers, Papiano explained, but conveniently ignored in the Brattle study.

The report also assumes significant new savings from energy efficiency and conservation efforts, as if customers are wasting expensive energy today, and can afford even more upfront costs.   

The Brattle study also assumes that natural gas price increases will gallop far more than electricity increases by 2030, partly because of state-mandated conversions away from fossil fuels. So, the state will help to cause the gas rate increases that will allegedly justify electric conversions. The Brattle study carries no discussion of the ratepayer costs of wind or solar farms (which don’t exist yet); their transmission lines, substations and distribution systems; the continued reliance on nuclear plants whose state-approved subsidies will expire; and gas-fired peaking units.

Transmission lines for offshore New Jersey wind farms are already heading for litigation because shore communities object to the lines’ onshore construction and offshore visual effects.

The Brattle study suggests lower-income customers might be spared some impacts because more state subsidies might be available to cover the huge costs of conversion and operation of electric appliances. But the study offers no prediction of how large the subsidies would be or for how long.

The cost projections are based on customers served by two of the state’s smaller gas and electric utilities, neither of which serves the majority of New Jersey homeowners, and neither of which has the highest rates in New Jersey. New Jersey’s overall electric rates are already among the highest in the country, and the EMP’s policies would do nothing to ease that burden.

And finally, the Brattle report suggests that the state will save $1.7 billion due to lower greenhouse gas emissions, yet, in the same section, notes this estimate was never actually calculated for the study.

Even a BPU commissioner dismissed the report’s value because it doesn’t address the biggest cost factors in consumers’ energy equation.

Papiano recalled that New Jerseyans have been waiting since the Energy Master Plan’s 2019 update to learn what it will actually cost. “With this latest study, we’re no closer to finding out, and it’s unlikely to be only a little bit more.”

Papiano argued that it doesn’t need to turn out this way if the Energy Master Plan and its proponents would fully consider what’s already happening in energy technologies and markets. The propane industry, he says, is already cutting emissions and saving money.

For example, according to the National Propane Gas Association, propane is already one of the cleanest forms of energy available. Using propane produces 43% fewer greenhouse gas emissions than using an equivalent amount of electricity generated from the United States grid. And today’s propane appliances are cleaner and more efficient than ever.

Propane’s low carbon intensity is why it is an approved clean alternative fuel under the Clean Air Act of 1990.

What’s more, “there’s no need for an expensive infrastructure build-out,” Papiano said. “It’s already in place, it’s privately owned, and it runs safely and efficiently.”

Papiano concluded, “Everyone supports a clean environment where they can afford to live, work and play. At the same time, all New Jerseyans deserve to know the full costs that the Energy Master Plan will impose, and to choose the energy source that’s best for their home or business.

“The state’s Energy Master Plan has always been an aspirational document,” Papiano said. “We — and our customers — agree with the lofty goals of a sustainable economy, energized by the sun and wind. It sounds great. But it’s not free or cheap.

“Consumers should be able to choose the energy that best fits their homes and businesses,” Papiano said. “When renewables are a practical and cost-effective solution, consumers should absolutely have that choice. Until then, the Energy Master Plan should promote choices that make sense for everyone.”