Caride, Schaer & Holley Bill to Facilitate Upgrades to Aging Energy Infrastructure Clears Assembly Committee

Measure Would Allow Use of P3s for Energy-Related Projects

Legislation Assembly Democrats Marlene Caride, Gary S. Schaer and Jamel Holley sponsored to facilitate upgrades to energy infrastructure in New Jersey and make the state more resilient in the face of severe weather events was advanced Monday by an Assembly committee.

“New Jersey’s aging state and local government-owned energy infrastructure demands significant investments to replace and upgrade obsolete facilities,” said Caride (D-Bergen/Passaic). “Ultimately, this is a public safety issue. Enabling governmental entities to develop needed state-of-the-art energy-related projects to improve the reliability and efficiency of the energy service provided to critical governmental facilities will prevent power outages during extreme weather and keep the state’s residents safe.”

The bill (A-4508), the “Improving Energy Infrastructure through Public-Private Partnership Act,” would allow public-private partnership agreements to facilitate energy-related projects at government facilities. Under the legislation, private entities would be responsible for designing, building, financing, operating or maintaining energy-related projects for government facilities in a manner similar to the approach authorized by the New Jersey “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.

“In the same way that the Economic Stimulus Act made on-campus construction and repairs possible for New Jersey’s colleges, this legislation will allow all state and local governmental entities to make necessary upgrades via public-private partnerships,” said Schaer (D-Bergen/Passaic). “By leveraging the expertise and financial resources of the private sector, New Jersey can foster the development of a broad array of energy-related projects that budgetary constraints may otherwise preclude.”

“Ensuring the adequate, reliable and continuing delivery of energy services to critical governmental facilities that provide necessary lifeline services to the state’s citizens and businesses has to be a priority,” said Holley (D-Union). “The increasing magnitude and frequency of weather events like Hurricane Irene and Superstorm Sandy has revealed how vulnerable our state’s energy infrastructure is and the danger that poses to the people of New Jersey.”

The bill also would create an Energy Public-Private Partnership Unit (Energy P3 Unit) within the Board of Public Utilities that would be responsible for the formulation and execution of a comprehensive statewide policy for P3 agreements that facilitate the development of energy-related projects. The bill would require the Energy P3 Unit to consult and coordinate with representatives of other state departments, agencies, boards and authorities to facilitate P3 agreements.

The bill outlines the criteria by which a governmental entity is to award an energy-related project P3 agreement to a private entity whose proposal is determined to be the most advantageous to the government 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;
  • the ability of the private entity to arrange financing on terms favorable to the government 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 government 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 measure was advanced by the Assembly Budget Committee, of which Schaer is chair.