07/23/2013 04:41 pm ET Updated Sep 22, 2013

New Jersey Offshore Wind: Dead or Alive?

If you read the local press last Friday, you would think the New Jersey Board of Public Utilities (NJBPU) turned down the Fishermen's offshore wind project once and for all. But the transcript of the board deliberations tells a different story.

Last Friday, the press reported that the NJBPU rejected the latest plan for a 25 MW offshore wind project nearly three miles off the coast of Atlantic City. The project was filed initially with BPU in May 2011, shortly after Governor Christie signed the Offshore Wind and Economic Development Act (OWEDA) creating an offshore wind incentive.

Fishermen's Energy, the project developer, had been awaiting BPU's ruling on its application. Via the news channels, NJBPU's rejection of a settlement negotiated between Fishermen's Energy and the state Division of Rate Counsel looked like a flat denial.

But if you read the transcript of the hearing, which just became available, it seems the Board has given the developer time to meet the objections of staff and maybe get the project moving forward.

First, it becomes clear that the developer and the NJ Rate Counsel have reached a stipulated agreement on the project -- which would be the first time any state agency has agreed on the use of NJ ORECs to finance an offshore wind project. That is news to most people. It means that the rate protection agency is satisfied with the impact of the project on electric rates. (Also the utilities do not seem to be opposed to the project, which is also news).

Second, it is the NJBPU that is the decision maker, so what it says matters most. Rather than a blanket rejection, as reported Friday, it seems that the Board actually has given the developer 10 days to respond to BPU staff objections. Perhaps the most important is the $19.2 million capped contingency fee that New Jersey ratepayers would pay Fishermen's Energy if the anticipated Department of Energy grant and the ITC tax subsidy to the project fell through.

Third, other issues are raised by staff too, including whether the project's net positive benefits to ratepayers (the net benefits test) would be met with the fund as structured.

Fourth, the transcript provides some revealing details about the ultimate project costs. It seems the developer agreement with rate counsel would have the per kilowatt hour costs drop as low as about 18 cents, which is reasonably low for offshore wind. That is with all state and federal subsidies included. The costs will escalate over time. But that low number will surprise many for offshore wind.

And finally, for what it's worth, in the transcript, NJBPU Commissioner Fox remains optimistic about the future of offshore wind in New Jersey:

"... today's decision should be viewed as an indication of this agency and also administration of New Jersey [interest} in offshore wind, [we] clearly want to see it move ahead."

So, it seems the reports of the death of the Fishermen's offshore wind project were premature.

The developer has another chance to prove the financial viability and net positive benefits of what would be the first OREC-financed wind project in the East.

But time is running out.