Saturday, January 5, 2008

Who's Reggie and why is he so disliked?

One of the most far-reaching pieces of environmental and economic legislation to engage New Jersey lawmakers in years almost slipped by with virtually no public notice.

Indeed, that may have been the intent of the proponents of the Regional Greenhouse Gas Initiative (nickname: Reggie) when it was introduced late in the Legislature's two-year session which ends on Monday, Jan. 7. The weighty and complicated bill got the classic fast-track treatment--quick committee hearings, constant changes on the fly and limited opportunities for testimony, media attention, education of the public, clarifications, or opposition to form.

If the strategy was to ram the complicated and potentially controversial bill through the Legislature's lame-duck session it was a wise lobbying move. During lame-duck--the period between the November election and session's early January expiration--the average lawmaker is less likely to raise questions, since his or her attention is fragmented by the large crush of bills attempting to win final passage. In addition, many lawmakers may feel less accountable to voters since they either are retiring from the Legislature at the session's end or have lost re-election bids in November.

In the last month, identical versions of "Reggie" quickly cleared key committees in both houses over the objections of major business organizations and the Public Advocate who argued that the bill posed too many unanswered questions to be rushed. Environmental leaders, who had initial objections, seemed mollified by evolving versions of the legislation. All that stood in the way was a Jan. 3 hearing in the Assembly Appropriations Committee. After that, the legislation was scheduled for a final approval votes in both houses on Monday, Jan. 7, the Legislature's final session.

That still may happen. In fact, the smart money would say it will. But the innocuous-sounding Reggie bill is no longer going unnoticed. In fact, except for the NJ Department of Environmental Protection and the state's utilities, the bill is now drawing heated opposition from virtually all other traditional interest groups--the business community led by the NJ Business and Industry Association, a now engaged and enraged environmental community, the editorial writers at the state's largest newspaper, and others who spent hours on Thursday before the Appropriations panel highlighting the bill's shortcomings and urging that it be held for revamping in the new session that opens on Jan. 8.

What is Reggie? And why is it causing such a fuss?

The bill would authorize New Jersey to join a compact of northeast states that are trying to ratchet down the levels of carbon dioxide emitted from power plants. They'd do that by charging utilities millions of dollars for those emissions in the form of 'allowances' which would be publicly traded and sold to companies that cannot or will not reduce their emission levels.

The huge chunk of money that this 'cap and trade' exercise is expected to generate would be doled out by the state for a wide variety of alternative energy and conservation projects and strategies, from encouraging businesses to install solar and wind systems to funding residential energy-conservation measures and even the planting of trees (which absorb and neutralize carbon dioxide).

Sounds pretty good, doesn't it? The DEP thinks so. And you'd expect environmentalists to be applauding as well. But the devil is in the details and the details are what put large industrial energy users, public interest groups and traditional environmental organizations shoulder to shoulder at the witness table on Thursday excoriating the measure.

For details, see the Bergen Record's Plan to reduce greenhouse gas called a sell-out and the Star-Ledger editorial Too many flaws in greenhouse gas bill

So who wants the bill? The governor does. It's part of his global warming response plan. The DEP does. It's apparently a key part of the agency's Energy Master Plan, although that document, promised in the fall, is still under wraps, not quite ready for prime time.

Perhaps most importantly, the state's largest utility, PSEG wants it and that's why the smart money, despite the level of opposition, will be betting the bill clears both houses on Monday and gets a quick signature into law by Governor Corzine.

PSEG is a major political powerhouse in New Jersey. It has extremely smart management, a team of seasoned lobbying and public relations practitioners and a glittering stable of outside lobbing talent on retainer. It also has tens of thousands of retirees in the state who depend on the continued success of the utility's stock (something the company reminds legislators whenever necessary) and a large pool of cooperative union and other employees who know how to make phone calls and write letters.

PSEG's staff has been all over the bill since it's introduction, offering advice, participating in back-room negotiations on amendments, testifying at hearings and monitoring the opposition.

Why is the energy company expending so much effort and money on a bill that will raise the cost of the electricity it buys?

For starters, the legislation allows the energy company to get into the business of marketing and installing energy-savings systems and devices in hundreds of thousands of homes and business across the state--potentially an enormous new revenue stream. Moreover, it streamlines the rate-making process so the utility can pass on the costs (and potential losses) resulting from such ventures to consumers, even allowing for automatic approvals if the state Board of Public Utilities fails to act on a rate request within 180 days. (Utility industry attorneys testified Thursday that the average BPU rate case takes a year and a half).

Also, by supporting the governor and the DEP, the utility scores big political brownie points.

Why is that important? PSEG is keenly interested in expanding its nuclear generating facility in Salem County. Guess whose approval it will need for that one.

This weekend, both sides are calling, faxing and emailing legislators. The New Jersey Environmental Federation, for example, has sent an alert to thousands of its members urging them to email legislators and ask for a no vote on the bill. Opponents and supporters will be cruising the hallways of the Statehouse on Monday, buttonholing legislators and pressing their best, final arguments.

The bill's fate actually will be decided prior to the session in the Democratic and Republican caucuses. All the speechifying on the floor will just be theater.

What will happen? With all the opposition the bill faces, it should go down. But I'm putting my money on PSEG and I don't own a dime of its stock....yet.

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