New Jersey pension funds would be forced to divest from the largest 200 publicly traded fossil fuel companies under a controversial bill approved by the state Senate Environment and Energy Committee last week as the fall legislative session gathered pace.
The bill was one of five clean energy bills heard by the committee Thursday, including one that would stipulate how much time electric vehicle chargers installed with state incentives should be available for use, and one that would require utilities to plan for the growth in the use of distributed electric resources.
The committee voted 3-2 along party lines to move the disinvestment bill, S416, forward, sending it the Senate Budget and Appropriations Committee. The legislation, which has not moved in the General Assembly, would require the State Investment Council and the director of the Division of Investment to divest any stock, debt or other security investment from companies with large oil, gas or coal reserves within 12 months of the law’s enactment.
The Division of Investment manages seven public pensions that support the retirement plans of more than 800,000 members with a total, as of May, of $92.9 billion.
“What’s proposed here is sending a signal to the fossil fuel world and industry that we’ve got to find different ways to live and you, the companies that produce these fossil fuels, have to help us,” said committee Chair Bob Smith (D), who sponsored the legislation. He acknowledged that it is a “controversial bill.”
Sen. Edward Durr (R), who voted against the bill, said he feared that enacting the legislation would have “unintended consequences.”
“I think our voice is greater when we are invested into a company, and we have leverage,” he said. “Plus I believe it sends a signal of [the government] picking winners and losers, and I disagree with that.”
The bill’s advance comes nearly a year after the State Investment Council codified a strategy to pressure the companies it’s invested in to reduce their emissions, including an in-house assessment of emission-reduction efforts across its entire portfolio and participation in shareholder pressure tactics. (See NJ Pension Fund Backs Climate Strategy.)
Opponents of the bill include the American Petroleum Institute; the New Jersey Society for Economic, Environmental Development; and the New Jersey Chamber of Commerce. Supporting the bill are environmental groups Clean Water Action, Environment New Jersey and the League of Conservation Voters.
“We live in a capitalist society,” said Ed Potosnak, the league’s executive director. “And one of the ways that we shift what corporations do is by voting with our wallets.”
By disinvesting, the state would send a message to fossil fuel companies that “we want you to succeed … in a future that is ever increasingly ravaged by the effects of climate change” by adopting a “new operating model,” he said.
But Dennis Hart, executive director Chemistry Council of New Jersey, said the “short sighted” bill “removes New Jersey from influencing the direction of the fossil fuel industry.” He said the state’s corporations are already working hard to develop new technologies that will help mitigate climate change, and selling shares would take “the state away from the ability to influence these companies.”
“It’s similar to somebody saying, ‘I decided not to vote because I’m sending a personal message,’” he said. “I think that’s a bad policy.”
Raymond Cantor, a lobbyist for the New Jersey Business & Industry Association, noted that the pension fund is already underfunded, and now is the wrong moment to do “anything other than making sound investments.”
“From a fiduciary responsibility, the state should be making sure that its pension is invested in sound, legal investments, and should not be taking public policy and these types of concerns into the equation,” he said.
Barbara Powell, co-chair of Divest NJ, which was formed to push for the reduction in the pension fund’s investment in fossil companies, said the profits from the companies are a “negligible” part of fund returns.
“Staying invested in a sector whose days are numbered is not a fiduciarily responsible policy,” she said.
Meter Collar Adapters
The committee also unanimously approved a bill, S3092, that would require electric public utilities to authorize the installation and operation of meter collar adapters.
The small electronic device, which is installed between a residential electric meter and meter socket, facilitates the deployment and interconnection of an on-site electric generation source. That enables the customer to isolate their load and use backup power.
The bill would require an electric utility to approve or disapprove a meter collar adapter for installation in its service area within 60 days of a manufacturer submitting a request.
Zachary Kahn, senior policy adviser for Tesla, said that no utility at present allows the use of meter collar adapters, and he urged the committee to approve the use of a device that he said would simplify and speed up the process of installing residential storage and backup power.
“Meter collar adapters provide an immense opportunity to expedite the clean energy transition by allowing energy storage, solar and even EV chargers to be installed in a fraction of the time and at a fraction of the costs at residences,” he said.
The committee also unanimously backed legislation, S3102, that would direct the New Jersey Board of Public Utilities (BPU) to require that any electric service equipment installed with a state incentive should be operational 95% of the time. The BPU would have to develop and implement a process of monitoring incentive recipients to ensure that they are compliant.
Committee Chair Smith, a bill co-sponsor, said the bill stemmed from a media report that some chargers are “out of commission” 60% of the time.
“That’s unacceptable,” he said. “So this bill sets the standard for the uptime, meaning that it has to be working a certain percentage of the time to get any kind of government support.”
However, Nicholas Kikis, vice president of legislative and regulatory affairs for New Jersey Apartment Association, said that 95% is “too high.” The operators of chargers that do not reach that standard would get 18.5 days to reach the required uptime “or the incentive could be clawed back,” Kikis said. Such a penalty, he added, could dissuade people from seeking government support and so reduce the development of new chargers.
That issue is especially concerning given the state’s goal that by 2030 EV chargers be installed in 30% of all multifamily apartments, he said. “There’s right now insufficient incentives” to reach that goal, he said.
Preparing for Distributed Power Sources
Finally, the committee approved a bill, S2973, that would require electric utilities to submit integrated distribution plans (IDPs) to the BPU. Such a plan, developed by the utility, outlines the physical and operational changes to the transmission and distribution system needed to adapt to the use of DERs.
Introducing the bill before a unanimous vote, Smith said that the reason for creating an integrated distribution system is that it “makes for a stronger grid.” It would first require the BPU to develop criteria for the IDPs, and utilities would have to submit them within a year.
The bill, which Smith co-sponsored, has not moved in the Assembly. It is supported by Environment New Jersey and the Natural Resources Defense Council and opposed by the New Jersey Utilities Association.
Also opposing the bill, the New Jersey Division of Rate Counsel argued that the timeline for review of the IDPs is too short — 90 days — and includes a “lack of stakeholder involvement.”
In addition, the Rate Counsel said in an Oct. 5 letter to the committee, the bill should take the BPU process into account more.
“Rate Counsel would prefer sufficient time for thoughtful deliberation of the issues involved in the IDP approval process,” it said. It also “believes the board and stakeholders should be afforded no less than 180 days of review and approval of the submitted IDPs.”
The Rate Counsel also planned to oppose a second bill, S2978, that would revise the state’s renewable energy portfolio standards out of concern that it would be expensive for ratepayers. However, the bill — which has not advanced in either the Senate or Assembly — was pulled by Smith, the primary sponsor, who concluded after receiving stakeholder input that “it needs some adjustment.”
The bill would revise the RPS requirements for Class I renewable energy, starting in 2030. It also would require that after 2030, at least 50% of the renewable energy certificates used by an entity to satisfy the RPS requirement for Class I energy be generated in New Jersey. In addition, the bill would require that from 2045, 100% of energy sold at retail in the state would be from Class I renewable sources.
