PSE&G’S EE — PSE&G is asking New Jersey utility regulators for permission to spend $3.4 billion over several years on a state-mandated energy efficiency program. In a filing and press release Friday, the company said the spending, which would begin in 2025, will result in a lifetime savings to customers of $3.5 billion and result in about 10 million fewer tons of greenhouse gases being emitted.

Though customers are expected to save a bit of money from reduced energy use, bills would increase by about $3 a month for the typical electric customer and $2.75 a month for the average gas customer.

“Today’s filing marks a pivotal moment in our journey towards a cleaner, more sustainable New Jersey,” PSE&G president and chief operating officer Kim Hanemann said in a statement Friday.

In a 300-page filing, the company said it would spend the money on several different programs, including: “(a) providing continuing opportunity to lower energy consumption and customer bills; (b) further reducing greenhouse gas emissions; (c) offering building decarbonization (‘BD’) and demand response (‘DR’) programs to residential and commercial and industrial customers; and (d) continuing and expanding on the Clean Energy Jobs Program.”

Some programs target residential customers and others commercial customers. Costs in the commercial decarbonization program are driven in part by a “networked geothermal demonstration” project, which has relatively high upfront cost and which the company describes as a plan to “develop, install, own, and operate one or more shared geothermal loops that will serve multiple customers over a 10-year period. Participating customers will have a heat pump installed to provide heating and cooling.” The project can take advantage of generous federal investment tax credits.

Combined with a separate pipeline upgrade program, the company said it expects capital investments from 2023 to 2027 to be between $16 billion and $18.5 billion, a key figure investors and analysts look at when judging the company. — Ry Rivard

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Here’s what we’re watching this week:

WEDNESDAY
— The New Jersey Board of Public Utilities meets.
— NYSERDA hosts a webinar seeking input on the design of a home energy rebate program through the IRA, 9 a.m.
— Environmental advocates host a panel promoting the “Birds and Bees Act” awaiting action by Gov. Kathy Hochul, 7 p.m.
— The New York MTA board meets.

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— The Times Union highlights the precarious situation New York City’s gas system faced during last year’s Winter Storm Elliott.
— Composting programs face budget cuts in New York City.
— A national climate report predicts a warmer, wetter Buffalo.
— There’s some hope on the horizon for Long Island scallops.
— Extreme weather has impacts for New York’s insurance market.

MURPHY THREATENS ANOTHER TOLLING LAWSUIT — POLITICO’s Ry Rivard: New Jersey Gov. Phil Murphy on Thursday threatened another lawsuit to block New York’s plan to charge drivers entering parts of New York City $15 more a day.

NEW YORK’S EXPEDITED SOLICITATIONS — E&E News’ Benjamin Storrow: New York extended a lifeline Thursday to four offshore wind projects struggling to stay afloat, saying it will accept bids for new offshore wind proposals until the end of January.

RENEWABLE GAS BILL STALLS: A bill to encourage the use of renewable natural gas stalled on Thursday in the Assembly Environment and Solid Waste Committee. The bill, NJ A577 (22R), faced hours of opposition testimony from environmental groups.

Supporters said the bill was a key part of helping to benefit from a regional hydrogen hub that could come to the region around South Jersey.

While South Jersey industry players have been most vocal about the bill, the state’s largest energy and utility company, PSEG, said the company “sees strong potential for RNG as part of a balanced approach to decarbonization” and that “RNG provides a unique pathway to leverage existing gas distribution infrastructure throughout the state to deliver a diverse supply of energy to customers that is reliable, resilient, and affordable.” — Ry Rivard

HOLTEC KEEPS CREDIT — POLITICO’s Dustin Racioppi: The nuclear energy giant Holtec is entitled to $26 million in tax credits the New Jersey Economic Development Authority had frozen, an appeals panel said Thursday, dealing a blow to the Murphy administration’s aggressive effort to scrutinize a massive incentives program widely criticized as favoring special interests.

RELIABILITY CONCERNS — POLITICO’s Marie J. French: The New York independent grid operator is warning that the retirement of fossil fuel plants on the system is outpacing new renewables coming online even as demand for electricity grows.

The New York Independent System Operator on Wednesday released its 2023 “Comprehensive Reliability Plan,” part of its regular planning process to ensure the reliability of New York’s electric grid. The nonprofit is tasked with keeping the lights on even on the hottest and coldest days of the year when electricity demand spikes. Reliability concerns have been raised repeatedly by the NYISO in recent years, although the report concludes there’s enough power to meet forecasted demand from 2026 through 2032. But several risks could lead to reliability needs being identified next year.

New York is undergoing an unprecedented shift to its energy system that currently relies mostly on natural gas to produce the electricity needed for homes and businesses. The state’s climate goals include aggressive buildout of renewables and mandate retirement of some fossil fuel plants in the coming decade. That shift is happening as electricity demand grows from increasing electric vehicles and heat pumps — and as manufacturers and other large energy users are courted to bring jobs to upstate New York.

CONGESTION PRICING DEETS: $15 TOLLS — POLITICO’s Ry Rivard: Drivers heading into parts of Manhattan may soon face a new $15 toll, according to draft recommendations from a group tasked with crafting New York’s congestion pricing plan.

The tolls, which could be in place next spring, would be a historic move for a city long plagued by traffic. The tolls are meant to discourage driving and ease traffic south of 60th Street and to help fund the Metropolitan Transportation Authority.

These recommendations, if adopted, will create an especially costly commute for some New Jersey drivers, about $25 or $30 a day combined with other tolls commuters already pay to cross the Hudson River.

“As a conceptual matter, I support congestion pricing, as long as it is structured in a way that is fair to all sides,” New Jersey Gov. Murphy said in a statement. “This plan is neither fair nor equitable.”

“Gov. [Kathy] Hochul has been clear from the start: congestion pricing is critical to New York’s future, delivering better transit, cleaner air and less traffic clogging our streets,” said Hochul spokesperson John Lindsay. “The governor has said repeatedly that $23 is too expensive for the central business district tolls, and is carefully reviewing the recommendations of the Traffic Mobility Review Board.”

WIND UP — New Jersey Gov. Phil Murphy is attempting to get the state’s offshore wind industry back on track after energy giant Orsted killed two of the state’s three wind power projects. The governor announced Wednesday that he’d directed state utility regulators to launch the fourth round of bidding for new wind farms in “early 2024,” according to a press release from his office, with projects to be awarded in “early 2025.”

That new timeline changes the old timeline, which anticipated the solicitation would come out in the third quarter of 2024, with awards to come in the second quarter of 2025.

The governor has set one of the nation’s most ambitious clean energy and offshore wind goals, but there are no wind turbines off the New Jersey coast yet and financial issues plaguing the industry threaten the only remaining project that has been approved. The state had previously awarded three wind farm projects in two rounds of bidding. Awards from a third round are expected soon. The bids and the awards are run by the state Board of Public Utilities, which is agreeing to pay for the power from the projects using ratepayer dollars.

“Today’s announcement affirms New Jersey’s commitment to offshore wind and to meeting Governor Murphy’s clean energy goals,” BPU President Christine Guhl-Sadovy said in a statement released by the governor’s office. — Ry Rivard

PROJECT MAPLE PUSHBACK: Environmental groups are gearing up to fight a proposed pipeline expansion project that would increase the amount of gas flowing through New York to New England. Pipeline operator Enbridge has solicited interest in expanding its Algonquin pipeline to supply up to 250,000 dekatherms per day to Salem, Massachusetts, and up to 500,000 dekatherms per day to Ramapo, New Jersey. The project would entail replacing smaller pipes with larger ones, adding pipeline parallel to editing lines and adding more power to existing compressor stations.

Such a project would avoid some of the water quality permitting requirements that New York has used to kill new pipeline projects in the past. New England states have faced gas crunches and high costs due to the lack of available supply. The environmental groups, including Food and Water Watch and Sierra Club, released a letter on Tuesday to the governors of New Jersey, New York, Connecticut, Rhode Island and Massachusetts, where the project is located. — Marie J. French

SOLAR MILESTONE: Gov. Kathy Hochul announced that the state has hit 2 gigawatts of community solar in New York. Community solar projects enable homeowners and renters who can’t install solar on-site to take advantage of the benefits of clean energy generated by these smaller projects. The industry has been booming in recent years, with state subsidies providing support. The overall total for distributed solar is about 5 GW with an additional 3.3 GW in development, according to Hochul’s office.

The state’s climate law set a target of 6 GW of distributed solar by 2025, and Hochul upped that to 10 GW by 2030. “Our ongoing investment in community solar generates measurable benefits for our health, our environment, our economy, and for the thousands of New Yorkers who can now enjoy lower electric bills, all thanks to our ability to harness the power of the sun,” Hochul said in a statement. — Marie J. French

NY HEAT PRESSURE CONTINUES: Backers of a measure to begin phasing out the state’s gas system are continuing to pressure Gov. Kathy Hochul to include the bill in her executive budget. More than 90 local elected officials sent a letter to the governor backing “NY HEAT” on Wednesday. The legislation would cap energy bills for low-income customers at 6 percent of their income, end subsidies for new gas hookups, end gas utilities’ obligation to serve new customers and set up a pathway to electrify entire neighborhoods.

“This critical legislation will reduce energy costs for our constituents who need it most and support the transition to a clean energy infrastructure system in New York,” the letter states. The state’s climate plan approved by the Climate Action Council last year calls for legislation to end the obligation to serve and the 100 foot rule. “Local governments do not control the utilities, and the utilities must be directed to provide affordable non-fossil-fuel alternatives to building heating,” said Sue Hughes Smith, a Monroe County Legislator.

Opponents of the NY HEAT measure, including National Grid and gas-only utility National Fuel Gas, have raised concerns about the reliability of the electric grid and the costs for older existing homes to switch from gas to electric heat. The bill does not by itself limit gas service or require customers to switch, but could enable the Public Service Commission to oversee neighborhood scale electrification efforts in the future. — Marie J. French

RENEWABLE GAS BILL BACK: Like other bills that we first reported on a year ago in New Jersey — a clean energy bill, a plan to rein in the state’s ratepayer advocate — a bill to encourage the use of renewable natural gas is back. The bill, NJ A577 (22R), which cleared one Assembly committee last year but hasn’t moved much since, is on the agenda for Thursday’s meeting of the chamber’s Environment and Solid Waste Committee.

Refresher: There was a back-and-forth over whether the bill allows utilities to enter into costly deals with their own affiliates. There are also environmental concerns about whether renewable gas would be clean or dirty. Those arguments are likely to get hashed out again this week, with supporters of renewable gas likely to point out other non-gas energy projects, like offshore wind, are lagging behind in the state. But opposition remains what it was. “This is just the same bad bill do-over,” Ed Potosnak, head of New Jersey League of Conservation Voters, said. — Ry Rivard

MURPHY ISN’T INTERESTED IN BUSINESS TAX FOR TRANSIT: New Jersey Gov. Phil Murphy swatted down a suggestion by Senate President Nicholas Scutari to use a corporate business tax surcharge to help fill a looming budget deficit at NJ Transit. During a speech Tuesday to the New Jersey Business & Industry Association, the governor said, “Without equivocation, I believe the CBT surcharge should expire at the end of this year. So as we approach the final weeks of 2023, I hope all of us can work together to achieve this shared goal. And look, I know there are some members of my Party who disagree with me on this. ... But like I have always said: our administration is not motivated by choosing Democratic solutions, or Republican solutions. We are motivated by choosing the right solutions.” So, for now, the budget hole at NJ Transit remains ready to open, growing to nearly $1 billion by summer 2025. — Ry Rivard

GIANARIS TAKES ON AMAZON WAREHOUSES: Legislative efforts to tackle impacts from warehouses, especially in dense urban areas, will continue next year. This time, Deputy Majority Leader Sen. Mike Gianaris, Amazon headquarters slayer extraordinaire, is pushing an additional layer of environmental review for proposed warehouses (S2127). The Queens lawmaker secured support from a key labor union and environmental justice groups to make it a priority in the coming session. The bill isn’t a new one, but the support from Teamsters Local 804, which represents 8,000 UPS workers in New York, could provide momentum for a renewed campaign.

The bill targets warehouses — including last-mile facilities, fulfillment centers and sorting centers — over 50,000 square feet. The Department of Environmental Conservation would issue regulations for a project-by-project review of warehouses and measures to reduce their emissions, including those from the trucks and other vehicles serving to shuttle goods to the location and customers. New warehouses would have to get a permit and show they wouldn’t contribute to local smog above national standards. Existing facilities would have to annually report on their operations and comply with new emissions regulations. The department would also issue a report on the potential of zero-emissions zones for delivery vehicles.

“We have fought hard to improve our air quality by enacting the nation-leading CLCPA, fighting fossil fuel power plants, and pushing for more electrification, but we cannot allow those to be stymied by the proliferation of e-commerce warehouses,” Gianaris said in a statement. “We need action now, and that’s why I’m introducing the Clean Deliveries Act to ensure we live up to our environmental commitments.” Gianaris will hold an event at 2 p.m. with supporters of the bill at Red Hook Community Farm. Residents of Red Hook have raised concerns about the growing number of vehicles from new Amazon facilities in the neighborhood. — Marie J. French

BUDGET WATCHDOG BACKS EMISSIONS TRADING: The Citizens Budget Commission supports emissions trading and on-budget spending for New York’s proposed cap-and-trade program. The business-backed fiscal watchdog released its recommendations for a cost-effective policy, dubbed “cap and invest” by policymakers, on Tuesday. “Trading should not be restricted,” the recommendations state. “Limiting this critical component of cap-and-invest would add uncertainty to the market, and potentially drive up the price of allowances without increasing the environmental benefits of the program.”

Gov. Kathy Hochul has backed cap-and-trade as the best way to achieve New York’s emissions reduction targets in the coming years. More details of the proposals, but not draft regulations, are expected by the end of the year. Proponents see a robust trading system with a declining amount of carbon emissions credits sold to polluters as the best way to harness market principles and achieve reductions more efficiently than sector-by-sector reduction requirements. Some environmental groups, including the powerful NY Renews coalition, are pushing back on the trading component of the system and raising concerns about achieving actual reductions in disadvantaged communities under the potential program.

CBC backs designing the program to facilitate linking the program with other state or regional systems. The group suggests using a more standard accounting methodology for emissions than what is required under New York’s climate law as one way to achieve that goal. The group also endorses “verifiable offsets” to reduce compliance costs and incentivize reductions in sectors not covered by the cap-and-trade program. Offsets are restricted under the state’s climate law and generally opposed by environmental justice groups.

Touching on what’s sure to make cap-and-trade a contentious feature of budget talks and even later in the legislative session, CBC also backs allocating revenue on budget rather than allowing NYSERDA to manage the revenues. Lawmakers put down a marker that they’d get a say in spending cap-and-trade money in last year’s budget. DEC and NYSERDA also have a statutory deadline at the beginning of next year to report to lawmakers and the governor on how to use the rebate funds to best benefit consumers. — Marie J. French

NJ’S SAD EV SCHOOL BUS PLAN — New Jersey Gov. Phil Murphy on Monday conditionally vetoed a bill meant to fund an electric school bus pilot program, citing technical reasons about the source and timing of the $15 million appropriation meant to fund the program. New Jersey has repeatedly struggled to get the program off the ground and it still remains unfunded. New York, by comparison, has a $500 million EV school bus program.

Doug O’Malley, the head of Environment New Jersey, said he hopes lawmakers will come up with a fix during the lame duck session. “There is no time like the present to start this program,” he said. — Ry Rivard

GORDON TO LEAVE NJ TRANSIT — POLITICO’s Ry Rivard: Bob Gordon, the former senator partially responsible for a law meant to reform NJ Transit, is leaving the agency’s board next month at the end of his term. Gordon said he told Gov. Phil Murphy via text that he did not want to be appointed when his term expires on Dec. 6. “Having served four years on the board, I thought it was time to leave,” Gordon said in an interview Monday morning.