Caride, Eustace & Wimberly Bill to Foster Development of Energy Projects across New Jersey Released by Assembly Panel

Bill Would Allow Private Entities to Partner with Public Agencies to Improve NJ’s Energy Infrastructure

(TRENTON) – Legislation Assembly Democrats Marlene Caride, Timothy Eustace and Benjie Wimberly introduced to foster the development of a broad array of energy-related projects, including cogeneration facilities, that might not otherwise be pursued due to budgetary constraints by permitting private entities to propose to projects at governmental facilities was approved Thursday by an Assembly panel.

The Governmental Energy Reliability and Savings Public-Private Partnership Act (A-1417) permits private entities to propose to governmental entities certain energy-related projects at governmental facilities through a public-private partnership agreement.

“The increasing magnitude and frequency of weather events, such as Hurricane Irene and Superstorm Sandy, and the devastation they inflicted on the state, have revealed the vulnerability, inadequacies and obsolescence of the state’s energy infrastructure, which has failed, sometimes for prolonged periods of time, to provide adequate, reliable and continuing service,” said Caride (D-Passaic/Bergen). “This bill will enable governmental entities to develop needed energy-related projects that will improve the reliability, efficiency and cost of the energy service provided to critical governmental facilities, including medical facilities, police and fire departments, colleges and universities and water and wastewater treatment facilities, and to prevent the occurrence of power outages during extreme weather events.”

“The reliability and efficiency of the state’s energy infrastructure will be improved if the state encourages the development of the governmental energy-related projects, which will enhance the production and delivery of energy, improve the energy efficiency of governmental facilities, reduce energy costs and greenhouse gas emissions, create jobs and promote economic development,” said Eustace (D-Bergen/Passaic). “Plus, the need to upgrade the state’s energy infrastructure comes at a time of fiscal austerity and budgetary restraint, so this is a fiscally responsible effort.”

“Governmental entities have witnessed dramatic reductions in available revenues as a consequence of the economic recession and weather-related catastrophes, among other things, and the scarcity of revenues, and reduced private sector investment, which has adversely affected, and will continue to adversely affect, the ability of state, county, and municipal governmental entities to make needed investments in energy infrastructure,” said Wimberly (D-Passaic/Bergen). “It’s necessary and appropriate for the Legislature to allow public-private partnerships to be established in order to leverage private sector financial resources and expertise and to permit governmental and private entities to share the responsibilities and benefits of such projects.”

The bill provides that private entities are responsible for designing, building, financing, operating or maintaining energy-related projects for governmental entity facilities in a manner similar to the approach authorized by the “Economic Stimulus Act of 2009, ” which, in part, authorized state colleges and universities to offer certain financial and other incentives to prospective private sector developers.

The bill creates a “Energy P3 Unit” situated within the Board of Public Utilities that is responsible for the formulation and execution of a comprehensive statewide policy for public-private partnership agreements that will facilitate the development of energy-related projects and for the development, promotion, coordination, oversight and approval of public-private partnership agreements. In doing so, the bill provides that the Energy P3 Unit is to consult and coordinate with representatives of other state departments, agencies, boards and authorities, including, but not limited to, the New Jersey Economic Development Authority, the Department of the Treasury, the Department of Environmental Protection, and the Department of Community Affairs, to accomplish the goals of the bill and facilitate public-private partnership agreements.

The bill authorizes the Energy P3 Unit to retain professional advisers and to charge certain fees to fund positions in the Energy P3 Unit and retained professional advisers.

The bill provides criteria by which a governmental entity is to award an energy-related project public-private partnership agreement to a private entity whose proposal is determined to be the most advantageous to the governmental entity. This determination includes, but is not limited to:

  • the general reputation, industry experience, technical capability, and expertise of the private entity;
  • the cost of the proposed energy-related project;
  • the responsiveness, creativity, innovativeness, and comprehensiveness of the private entity’s proposal;
  • if applicable, the ability of the private entity to arrange financing on terms favorable to the governmental entity;
  • the proposed allocation of risks and performance guarantees;
  • the incorporation of innovative terms and conditions that would not otherwise be available to, or would not be available upon a comparable basis to the governmental entity;
  • any cost savings, if applicable given the nature of the energy-related project;
  • the public benefits of the energy-related project, including economic development, job creation, and reduced environmental impacts; and
  • the experience and capability of the private entity in implementing comparable energy-related projects outside of the state.

The bill prescribes competitive contracting procedures to govern energy-related project public-private partnership agreements, including procurements and prevailing wage requirements for workers engaged in construction activities and other worker protections, and provides necessary oversight authority to the Energy P3 Unit to protect the interests of participating governmental entities.

The bill was released by the Assembly Telecommunications and Utilities Committee, on which Assemblyman Wimberly serves as Vice-Chair.