When it comes to green megaprojects, the public is bound to pay up eventually.
New Jersey lawmakers nodded to that truth last week after being taken for a billion-dollar ride by a Danish energy firm.
Gov. Phil Murphy signed a bill Thursday to grant a major tax break to Ørsted, one of the world’s largest developers of offshore wind power. [emphasis, links added]
The company is under contract to build a wind farm off the Atlantic City coast to power homes for more than half a million residents.
The deal was announced in 2019 with a projected cost of about $1.6 billion.
Yet this year Ørsted came back to Trenton with the world’s most predictable request: more cash.
The company says its cost estimate has increased owing to inflation and supply-chain snags. The project received federal approval this month, but executives have threatened significant delays.
New Jersey Democrats responded with a bill that offsets a large share of Ørsted’s costs. The catch is that the relief will come at the direct expense of electricity ratepayers.
The law deletes a previous provision in Ørsted’s agreement that required the company to use any federal tax credits it receives to offset the rates it will charge for the power it generates.
The cost of the new deal is difficult to determine, but GOP state Sen. Ed Durr estimates it could raise electricity bills up to $1 billion over several years.
That’s because tax credits made available through last year’s Inflation Reduction Act will now be pocketed by Ørsted instead of flowing to ratepayers.
“Ratepayers are already paying higher costs on their electric bills to help fund the offshore wind farms,” said Mr. Durr.
“Ørsted is realizing that wind farm projects don’t make economic sense without major government subsidies, so now they’re looking for a huge handout at the expense of utility customers.”
The new law attempts to mitigate the public cost by requiring that Ørsted set aside $200 million in escrow with the state. But even if those funds are returned directly to ratepayers, they amount to a fraction of Thursday’s giveaway.
Two years after Ørsted signed the agreement, the electric utility PSEG bought a 25% stake to help hedge risk. Ørsted bought out PSEG earlier this year, likely in anticipation of the additional tax credits on the way.
The state utility board has also considered adjusting its contract for inflation, which would create another windfall for Ørsted.
Ørsted may not be the last wind bailout beneficiary.
Atlantic Shores, a partnership of Shell and French firm EDF, is developing a separate offshore project in New Jersey that it now says is doomed without more state help.
Without “immediate action,” the company said in a statement Friday, “tens of thousands of real, well-paid, and unionized jobs are at risk.”
None of this seems to be a cause for regret among the lawmakers who authorized the mega-boondoggles.
Gov. Murphy and company will bow to the climate political gods at any price. The real victims are the tax- and ratepayers stuck bearing the costs.
h/t Steve B.
Read more at WSJ
Can anyone guess why politicos in the West only seem to been deluded by the AGW scam?
No one needs those Bird Chopping Whale killing eyesores off their coasts vote a total ban of offshore wind turbines
That wind power sure is cheap when the governments have to pay for the installation capital costs via the taxpayers.