TRENTON, N.J. (AP) — New Jersey lawmakers are considering letting Danish offshore wind developer Orsted keep tax credits that it otherwise would have to return to ratepayers.
The state Legislature was considering a bill Tuesday that would allow Orsted to keep federal tax credits to help counter what they termed lingering economic effects from the COVID-19 pandemic and elevated inflation.
The bill was to be amended at some point Tuesday, state Sen. Paul Sarlo said. But no action had been taken as of 5 p.m., and it was unclear what changes were being contemplated.
The federal 2022 Inflation Reduction Act is “designed to further spur investment in the American clean energy economy in the face of continuing macroeconomic challenges,” according to the bill, which was sponsored by Sen. Bob Smith, a Democrat from Middlesex County.
But the state's Ratepayer Advocate warned against passing the bill in its current form.
“While we support offshore wind, we have significant concerns about this bill, its impact on ratepayers, especially the costs and no protections for ratepayers, and the lack of accountability by the beneficiary of this bill,” Robyn Roberts, a spokesperson for the New Jersey Division of Rate Counsel, wrote to lawmakers.
Brian Lipman, the division's director, wrote, “There should be no doubt that this bill will increase the amount the developer earns on this project and will result in higher ... prices being paid by ratepayers. That is the inevitable result of this bill.”
Orsted has state approval for two offshore wind projects off the southern coast of New Jersey.
In a statement to The Associated Press, Orsted supported the proposed bill.
“Without this legislation, the value of the new federal tax credits would be passed back to ratepayers," said company spokesperson Stephanie Francoeur.
Orsted estimates the value of the credit would be 20 cents per month, or $2.40 per year per ratepayer, but did not estimate the company's total anticipated benefit.
“The offshore wind industry has already taken root in New Jersey, supporting the growth and the creation of new, family-sustaining jobs and economic investment,” Francoeur said. "In a fiercely competitive regional economy, the federal tax credits put New Jersey on a level playing field with other states already benefitting from offshore wind, incentivizing the development of a major clean energy project and domestic supply chain as intended by Congress.”
Earlier this month, a think tank established by former state Senate President Steve Sweeney cautioned that offshore wind projects could be delayed by the rising costs of building the foundations for offshore wind turbines.
Orsted is the only company that would benefit from the bill. A third approved project, Atlantic Shores, is a joint venture between EDF Renewables North America and Shell New Energies US, but does not qualify under the state bill.
The bill would require Orsted to file an affidavit affirming that it will proceed with construction, a schedule by which the company will make all its investments in wind energy facilities, a pledge to post a performance security bond for investments in qualified wind energy facilities, and a pledge to post a bond for the project itself.
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