SOLUTIONS 5/1: Renewable Energy Supply – A Tale of Two Rates

By Huck Fairman

The Town of Princeton has admirably drawn up a number of steps to reduce the cost and the emissions, or pollution, stemming from power generation and usage, along with that from vehicles. These initiatives are joined together in the Princeton Climate Action Plan.

Part of that plan was to provide residents with options to reduce the cost and pollution from generating, or supplying, electric power. Reducing pollution essentially means turning away from using fossil fuels as power sources.

Recently, Mayor Liz Lempert sent out a letter to residents announcing that residents can opt out of the new contract the town has negotiated with a supply company, Constellation New Energy (CNE), for its electric supply (not delivery, which PSE&G will continue to provide.) The letter states that this agreement with CNE will provide electric energy that “has a 50% renewable energy content at a price ($0.13053) that is projected to be lower than PSE&G’s … supply rate over the life of the contract.” Residents can also opt for a 100% renewable product option at a slightly higher rate.

An additional benefit is that with the support implied by residents choosing this option, their actions will signal to power providers and governments that renewable energy is preferred and its expansion supported. This encourages power companies to purchase more renewable energy credits (RECs) from the state, which can theoretically help finance renewable expansion.

However, there are several problems with the town of Princeton’s supply promises. One is that CNE, PSE&G and other suppliers (which do not generate power — they buy and sell it) all draw from the same power transmissions in the regional (PJM) network, which is comprised of about 4% renewable energy. Therefore, Princeton’s promise of 50-100% renewable energy content may be easily misinterpreted as simply clean energy. This supply level, however, can be reached only by including the RECs that CNE owns. Those RECs gives CNE credit for a cleaner supply, but do not actually change the electric power they buy and sell.

The following explanation is from CNE:

“Each REC represents the positive environmental attributes of one megawatt hour (MWh) of electricity generated by a renewable power plant and is retired on behalf of customers wishing to promote their environmental commitment. The purchase of RECs supports the operation and development of facilities that generate clean, renewable energy.”  (CNE Source)


The composition figures for our local grid’s power sources are available in at least two environmental information disclosure (EID) charts, which confirm that the percentage of renewable energy in the electricity we receive is indeed about 4% — not 50%, not 100%.

To really increase the percentage of renewables in New Jersey’s power options, it looks like we all will have to hope that the planned wind farms off the coast will, in fact, produce the clean energy that is estimated to provide in future years 50% of the state’s power needs.

As for the promises promoted by CNE, one can find, on Wikipedia, criticisms from environmental organizations (Greenpeace, The World Wife Fund for Nature) alerting us to the fact that RECs do not actually increase the amount of renewable energy, but simply give credit for what already exists and perhaps encourage development. That arrangement mostly benefits the certificate holders, particularly if they can sell them at a price higher than they paid. But, if RECs are so beneficial for, or encouraging of, renewable energy, why has the 4% renewable energy not increased substantially over the many years of the RECs existence?

We all, residents and the town, want to encourage and use cleaner power to preserve our environments and our health. It is, therefore, disappointing that the town has contracted with a company whose energy content, as detailed in the several EIDs, is not clearly explained by the town to those expecting to buy clean, or cleaner, electricity.