Headline: “Gov. Christie expects property taxes to rise in Sandy-ravaged areas”

Michael Giberson

At least the Governor understands that emergencies can drive costs up. We’ll see if this understanding goes beyond the expenditure of public funds to include excess costs faced by small business in New Jersey once the state gets around to prosecuting price gouging cases in earnest. Christie tax story here.

One example of the higher cost of government due to the storm: in at least four cases local government officials–mayor, police chief, sheriff, school superintendent–used local-government portable generators to power their homes or small businesses during power outages.

Columnist alleges post-Sandy pizza price gouging

Micheal Giberson

I’m fascinated by this story by Karin Price Mueller, a columnist for The Star-Ledger, about post-Sandy price gouging. Here is the shortened version of the main episode:

But after more than 48 hours without electricity …, my three children and I wanted a change of scenery. We went across town to a friend’s house for a few hours.

Driving home, we saw lights in a local pizzeria.

“Open,” the light in the window beckoned.

Growing a little bored with my culinary creations on the propane-powered grill, we were eager for a change.

I asked the cashier what they were selling.

Generator-powered large pies or thin-crust versions, no toppings. $15 each.

I ordered one, and we waited with another 20 customers, basking in normalcy, warming up from the cold, savoring the delicious smells wafting from the ovens.

When it was ready, I paid cash and we ate.

And it was delicious. Nothing left but crumbs and a grease smudge or two.

Word must have gotten around, because dozens more customers came, bought pizza, and left in the time we were there.

We returned home, bellies full. Satisfied.

So far, nothing out of the ordinary, but the columnist spent the next day writing a story about post-disaster scams and price gouging. Then it hit her–maybe she paid too much for that pizza the night before.

She dug up a take-out menu from the pizza place and determined the normal cost of the pizza she bought was $11.95, and $15 was a lot more than just 10 percent higher than $11.95.  She wrote, “in retrospect, I wondered if I was a victim of classic price gouging at the pizza joint.”

She returned to the pizza place, explained her price gouging issue to customers to get their reactions and spoke with the merchant. The consumers were mostly satisfied to get what they could at the price offered. The merchant said his usual suppliers weren’t available so he sought out additional sources, and the new sources were more expensive. He also said he’s giving by-the-slice customers a bigger slice–one-sixth instead of one-eighth–which more than makes up for a price which is more than 10 percent higher.

What fascinates me here is that usually consumer’s reaction of “I’ve been gouged” is an immediate and emotional one. Here the consumer’s experience was one of complete customer satisfaction until, sometime the next day she consults an old take-out menu and discovers the price she was happy paying the day before was actually higher than the price the pizzeria charged prior to the storm. Only then does she think that she might have been gouged.

I wonder whether she filled a formal consumer complaint. After all, she wrote, “Pizza isn’t the most important issue out there, but the law is the law.”

RELATED: The same columnist also wrote, “After Sandy, a debate about what actually constitutes price gouging.” The article contrasts the New Jersey law on price gouging with the views of critics, and quotes College of New Jersey philosopher James Stacey Taylor in defense of allowing merchants to raise prices freely. Next we have views from the NJ Attorney General and a former head of the NJ Division of Consumer Affairs (Notable quote: “there are times when the rules of commerce don’t apply and the rules of humanity take over.”). Taylor recently had an op-ed defending price gouging published at The Star-Ledger.

New Jersey politicians poised to pour more ratepayer money into solar power developer pockets

Michael Giberson

The bill isn’t signed into law yet, but New Jersey solar installers are probably breathing a little easier given reports that New Jersey Governor Chris Christie is expected to sign a law that would boost the state’s electric utility’s solar power purchase obligation from about one-half of one percent to over two percent of the utilities’ electric power sales. (See related.)

Meanwhile, a New Jersey-based unit of an Italian solar panel maker is calling it quits, saying it couldn’t compete with Chinese solar panel manufacturers. The company, MX Solar USA, LLC, had taken $3.3 million in loans and grants from the state of New Jersey, but apparently it wasn’t enough to enable the solar panel maker located in the countries hottest solar PV market to out compete international solar panel manufacturers. MX Solar was among the U.S. companies that filed the anti-dumping complaint against China that resulted in significant tariffs being imposed on several Chinese manufacturers. The company complains that Chinese manufacturers are evading the tariffs by partnering with companies in other countries.

In an amusing tidbit tossed in right at the end of the article on MX Solar, reportedly the company purchased at least some of the solar cells it used in its solar panels from Chinese solar cell manufacturers. It claimed Chinese solar panels were unfairly subsidized, but when it went shopping for parts, it found Chinese solar cells at prices hard to beat!

New Jersey solar installers seek “Endless Summer” at ratepayer expense

Michael Giberson

A crisis is coming for the New Jersey solar power installation industry. Stringent solar power purchase requirements imposed on electric utilities (i.e. on electric utility ratepayers) has turned the state into the nation’s second largest for solar power capacity installed, behind only sunny California.

But now that installed capacity is sufficient to meet current requirements, the installation business is expected to drop way off.  (The purchase requirements actually increase each year through 2021, but the rate of growth is slowing.) That expected drop off has lobbyists for both the solar power industry and unionized solar installers descending on the state capital, pleading for imposition of still higher purchase requirements on electric power consumers. The rallying cry has been to “save the jobs” created by the solar power purchase mandate.

Here is one report, “NJ looking to rescue ailing solar industry“:

New Jersey has long been known as the Garden State, but during the last five years, it could have easily been known as the Solar State from all the sunlight-absorbing panels that have cropped up nearly everywhere.

They’re on the roofs of schools, churches, municipal buildings and sewage treatment plants. They’re in farm fields and attached to utility poles. Even one of New Jersey’s trademark diners recently went green and installed panels.

But all is not well with New Jersey’s once-thriving solar industry, which has grown so big, so fast, that it’s now in danger of collapsing on top of itself.

The industry’s future could hinge on the work of the state Legislature during the next several months as lawmakers look to craft a bailout bill that rescues the solar market and the thousands of jobs it created.

A bailout bill was approved by the Senate Environment and Energy Committee on Thursday, but Bill S 1925’s chances of becoming law are far from certain as it relies largely on making power companies buy more electricity from solar generators.

Critics warn that doing so could mean higher bills for the state’s ratepayers. Supporters say without government help the entire industry will likely collapse.

“We have a crisis, and the crisis is this: If the market stays the way it is, there will be no new projects in the future, and the ones out there now will fail,” Sen. Robert Smith, D-17th of Piscataway, said Thursday at the onset of the lengthy hearing on the bill, which drew hundreds to the Statehouse, many of them union members who work in the industry.

At issue is the market for the electricity that solar panels produce, which has crashed during the last year because of an oversupply of solar development.

Under state law, utilities must obtain part of their electricity from solar generation. To do so, most must buy solar renewable energy credits, or SRECs, from solar panel owners.

The market for the credits originally boomed and helped New Jersey become the nation’s second-largest solar power producer behind California. All that development caused a glut in the market that has seen SREC prices decline from $650 or more in 2010 to less than $100 at times this year.

“We’ve become a victim of our own success,” Smith said. “We’ve had so much solar built in New Jersey that the market for SRECs has crashed.”

Historical SREC values are charted at the Flett Exchange.

The crash in the value of an SREC has cut into revenues projected for private businesses and public schools that have had solar panels installed. Banks have become less willing to loan for solar projects as subsidy revenues have dropped off.

A bill circulating to bail out the industry would both increase the mandated purchases, cap the size of solar projects built, and require projects gain approval from state regulators before they are built. The bill has failed, or at least stalled, on the issue of regulator review – the industry wants all existing projects exempted from regulatory review while the Governor’s office and some others insisted on no exemption.

All hope is not lost for the industry, even should the legislature fail to raise the cost imposed on ratepayers in order to bail out the New Jersey solar industry. The chairman of the New Jersey Board of Public Utilities has said if legislators don’t act then the BPU might simply impose a higher solar mandate on its own authority.

BACKGROUND: For an extended assessment of solar power incentives in state Renewable Portfolio Standards see Ryan Wiser, Galen Barbose, and Edward Holt, “Supporting Solar Power in Renewable Portfolio Standards: Experience from the United States,” Lawrence Berkeley National Laboratory, Berkeley CA, October 2010. LBNL-3984E.

New Jersey is not exactly the sunshine state, but solar panels spring up with help of state government

Michael Giberson

Casually scanning a solar resource map wouldn’t naturally lead you to think that New Jersey would be a good candidate for solar power, but state government policies have resulted in it leaping into second place in PV installations (after California) in 2010.

NREL PV Solar Resources Map

NREL PV Solar Resources Map

More PV was installed in New Jersey last year than in Nevada, Arizona, Florida, Colorado, New Mexico, Texas, or Utah. Much more than Oregon, which has a lot better quality resource for PV solar, is about 12 times larger, and no slouch when it comes to flashing its environmental credentials.

The New York Times reports that not all residents of the state are happy with the solar panels popping up on utility poles and other places. Guess you can’t make everyone happy, right? Whether they like it or not, electric ratepayers throughout the state have been helping to fund the project.

Some highlights from the Times:

ORADELL, N.J. — Nancy and Eric Olsen could not pinpoint exactly when it happened or how. All they knew was one moment they had a pastoral view of a soccer field and the woods from their 1920s colonial-style house; the next all they could see were three solar panels.

“I hate them,” Mr. Olsen, 40, said of the row of panels attached to electrical poles across the street. “It’s just an eyesore.”

Like a massive Christo project but without the advance publicity, installations have been popping up across New Jersey for about a year now, courtesy of New Jersey’s largest utility, the Public Service Electric and Gas Company. Unlike other solar projects tucked away on roofs or in industrial areas, the utility is mounting 200,000 individual panels in neighborhoods throughout its service area, covering nearly three-quarters of the state.

The solar installations, the first and most extensive of their kind in the country, are part of a $515 million investment in solar projects by PSE&G under a state mandate that by 2021 power providers get 23 percent of their electricity from renewable sources. If they were laid out like quilt pieces, the 5-by-2.5-foot panels would blanket 170 acres.

New Jersey is second only to California in solar power capacity thanks to financial incentives and a public policy commitment to renewable energy industries seeded during Gov. Jon S. Corzine’s administration.

But his neighbor Tony Christofi, a 47-year-old contractor, wondered aloud whether Fair Lawn, by not fighting, was getting more than its fair share.

“I’m fine with green energy,” he said, “but are the savings going to be passed on to consumers?”

PSE&G officials said solar energy was still more expensive to produce than more traditional power sources and acknowledged that bills were going up 29 cents a month. Each panel produces 220 watts of power, enough to brighten about four 60-watt light bulbs for about six weeks. When complete, this project is expected to provide half of the 80 megawatts of electricity needed to power 6,500 homes.

The article notes a shift in priorities that came in with the state’s new governor: “Although he supports renewable energy, Gov. Chris Christie, through a spokesman, characterized the mandates that spawned the panel project as ‘extremely aggressive.’ He has already asked that they be re-evaluated.”

In February, a New Jersey newspaper reported, “The state will move away from subsidizing residential solar projects to emphasize commercial installations and encourage the construction of more gas power plants in a revised energy master plan….”

Punishing gasoline customers for non-existent ‘price gouging’ by New Jersy station

Michael Giberson

First, the news:

Washington Township, N.J., gas station ordered temporarily closed for price gouging

A judge on Monday [July 13] ordered the temporary closing of a Washington Township, N.J., gas station after the owners pleaded guilty to price gouging.

Express Fuel on Route 31 North, south of Washington, will reopen on Monday. The judge also ordered the station’s owners to pay a $1,500 fine and court costs.

An investigation by the Warren County Department of Weights & Measures revealed the station owners violated a rule permitting only one price change within a 24-hour period.

On June 19, the price for regular gas changed three times within a few hours. At 11:03 a.m. that day, the price was $2.43.9 a gallon. The price went down to $2.39.9 at 11:24 a.m. and up to $2.41.9 at 2:10 p.m.

Weights and Measures Superintendent Michael Santos said typically the price changes are all upward or all downward. He said the changes reflect competition among gas stations.

Santos speculated the Express Fuel price went down and back up that day because the owners realized they mistakenly lowered the price more than they needed to.

The gas station is closed all week.

This stupidity momentarily rendered me speechless.

During that moment, I looked up some associated data. All of the prices mentioned in the article were about 10 to 15 cents below the average price in the state at the time (about $2.56/gallon mid-June according to AAA’s Fuel Gauge Report). So this is not “price gouging” in the normal English-language meaning of the term, not even close.

Nonetheless, more than one price change in a day is apparently a violation of somebody’s rule. Pending revision of the rule to something more sensible, there was a technical violation of the rule. Fine. Stupid rule, as this case illustrates, but a violation is a violation.

But why impose a penalty on the station that also penalizes gasoline customers in the area by giving them one fewer station to shop at for a week?

Clearly the court-ordered shutdown of the station for a week will harm consumers many times more than the harm, if any, from the station changing its price twice in a day.