New Jersey Gov. Phil Murphy has appointed Brian O. Lipman, a veteran litigator and senior executive at the state Division of Rate Counsel, to lead the consumer advocacy agency through what is expected to be a period of dramatic and unprecedented evolution in the energy sector.

Lipman joined the division in 2013, spending eight years as its litigation manager before being named acting director after Stefanie Brand retired in September. He also spent 10 years, 2003 to 2013, as a deputy attorney general in the state’s Division of Law where he represented the New Jersey Board of Public Utilities (BPU).

Lipman takes the position of rate counsel as the state reshapes its energy sector in line with Murphy’s Energy Master Plan to reduce New Jersey’s carbon emissions 80% below 2006 levels by 2050. Strategies to achieve that goal include boosting the use of solar with new programs for community solar and grid-scale development, jumpstarting a new offshore wind industry and aggressively promoting the use of electric vehicles. Murphy has particularly focused on cutting emissions from the transportation sector, which accounts for about 40% of the state’s carbon emissions.

Lipman was sworn in as rate counsel on Nov. 8, with Murphy in attendance, as posted on the governor’s official Facebook page. “Under his leadership, we will continue to ensure residents receive safe and affordable utility service,” Murphy said.

In an interview with NetZero Insider, Lipman said it is “hard to say” whether he will take the department in a different direction to the one charted by Brand because “a large portion of what we do is reactive.” While he worked on numerous issues as the division’s litigation manager, market changes mean he will confront others not faced by the agency before, he said.

“We’re entering an era of transformation within the energy industry,” Lipman said. “There’s going to be a lot of things that no one’s ever looked at before that we’re going to have to look at. And that helps set policy.

“It’s a fascinating time,” he said. “It’s a little bit [of a] scary time because of how much everything is going to cost, but it is also a hopeful time. I think that we’ll have a better, safer grid at the end of all this. It’s just a matter of figuring out how we pay for [it].”

Holding the Line on ZECs

Lipman foresees no change in direction to the division’s vigorous opposition to the zero-emission subsidies the BPU awarded to three South Jersey nuclear units in March 2019, and then again on April 27. On both occasions, the BPU awarded $300 million in zero-emissions credits (ZEC) to Public Service Enterprise Group (PSEG) (NYSE:PEG), which owns two of the plants, and Exelon, which co-owns the third plant with PSEG.

State law allows the award of ZECs to nuclear power plants at risk of closure, but the division, under former Rate Counsel Brand, argued that the BPU failed to show that the nuclear plants would lose money without the subsidies. (See NJ Nukes Awarded $300 Million in ZECs.)

The division took the first case to the state Supreme Court, where it was dismissed. On Oct. 12, Lipman, as acting director, appealed the board’s April 27 award to the N.J. Superior Court Appellate Division, again contending that the facts did not support the award. (See NJ Rate Advocate Challenges 2nd Round of Nuclear Subsidies.)

“We’re going to continue that challenge,” he said. “We’re just not convinced that the amount of ZECs that were paid to PSEG were necessary.”

Lipman said he is comfortable standing up to PSEG, the state’s largest utility. He said he has had numerous interactions with the utility over the years, including as deputy attorney general representing the BPU in an 18-day trial in federal court in 2011. The case involved a lawsuit filed by PSEG against the state’s Long-Term Capacity Agreement Pilot Program that awarded subsidies that the utility disagreed with for the construction of three gas-fired generators in New Jersey that would compete with PSEG.

PSEG won the case, Lipman said, “So, I’ve seen the full weight of the corporation and what they can bring to bear.”

But that case also brought his work to the attention of Brand and eventually brought him to the Division of the Rate Counsel.

“My goal, and I believe we’ve done very well, is [that] while [the relationship with PSEG] may be adversarial, it’s professional,” he said. “And at the end of the day, we can walk away from each other with mutual respect. I’m not going to agree with everything they want to do; they’re not going to agree with everything I say. And we both know that.”

Vying for Fair Cost Allocation

Lipman expects “to see a lot more federal and state transmission issues” than his predecessor, such as the BPU and PJM’s recent solicitation for suggestions on how to modernize the grid to accept energy from the offshore wind developments underway. (See New Jersey Seeks OSW Transmission Ideas.)

“Grid modernization is a big issue now,” he said. “That’s obviously more on the distribution level because the BPU regulates the distribution level,” he said, adding that he expects modernization of transmission infrastructure to be significant as well. “PJM is also looking at grid modernization and what they need to do to upgrade their grid.”

On those issues, and others, his office will monitor how those upgrades are funded to ensure that ratepayers are charged fairly, he said. The rise of the state’s offshore projects will also raise ratepayer and transmission issues that are “much different from anything we’ve ever seen in the state before,” he said.

“Bringing all that power on shore is going to be massive, and making sure that the allocation of those transmission lines is appropriate and that New Jersey is not bearing an unfair weight of that power as it goes into the PJM grid is important,” Lipman said. “And to the extent it goes to New York, to make sure New York is paying its fair share.”

Cost allocation for infrastructure is always an issue, and the rate counsel has been concerned for a while about the allocation of the cost of transmission upgrades in North Jersey, he said.

“Because the lines are in PSEG territory, we are paying for them. We think they should be allocated to New York ratepayers,” he said. “Similarly, lines built in New Jersey for PJM will benefit other states in PJM, and to the extent they benefit, they should pay.”

Advocating for People

As a member of the executive committee of the Consumer Advocates of PJM States, Lipman will likely have a voice in cost allocation discussions.

The new rate counsel graduated from American University with a bachelor’s degree in political science in 1992 and earned his law degree from Rutgers University in 1995.

As an attorney in private practice from 1997 to 2003, he represented private employers and federal employees in in employment litigation matters. He joined the New Jersey Division of Law in 2003, working on a portfolio of cases with periods working at the Division on Civil Rights and Affirmative Litigation Section, both of which are part of the Division of Law.

Lipman said his experience litigating in private practice helped prepare him for the kind of analysis and high-density information absorption he needs as rate counsel.

“I would be lying if I didn’t say I don’t learn something new every day, even now, in the utility world, and you have to be willing to do that — to go out there and just really dig into this stuff to really learn it,” he said.

But Lipman is most motivated in his new role by the opportunity to advocate for those in need.

“I’ve met people out there who have said to me, ‘I have to choose between my medication, my heat and my food. I can’t afford all three. How do I choose?’” he said. “And now I’m advocating on behalf of those people to try and keep their rates down and reasonable.”