[for version with supporting links:
Martin: BPU/Rutgers EMP “one of the worst pieces of economic analyses I’ve ever seen”
Fresh off last week’s unprecedented and false attacks on DEP scientists and Senate Majority Leader Barbara Buono, DEP Commissioner Bob Martin repeats and expands his errors.
Martin now is attacking the Board of Public Utilities staff, Rutgers economists and planners, and state econometric and energy models.
A “NJ Spotlight” story by former longtime Star Ledger energy and environment reporter Tom Johnson reported on the Assembly oversight hearings on how Governor Christie’s 90 day “reassessment” and more than $300 million cuts will impact the Energy Master Plan (EMP) – we wrote about the Assembly hearing here). In the Spotlight story, Martin blasted the economic analysis of the EMP.
But compare Martin’s hack attack with the professional response of his colleague, BPU President Lee Solomon (who merely put a happy face on a bad Christie policy):
Cabinet officials insist they do not envision a radical rewriting of the [Energy Master] plan. But Department of Environmental Protection Commissioner Bob Martin and Board of Public Utilities President Lee Solomon have made it clear they believe it fails to consider the economic consequences of pursuing such ambitious targets, including reducing energy consumption by 20 percent by 2020. …
“There has to be a cost benefit analysis on the things we do,” said Solomon, whose agency will take the lead in reviewing the plan. “We can’t simply impose what we would like to happen on the state of New Jersey.”
Martin is even more adamant about the plan’s flaws. “It is one of the worst pieces of economic analyses I’ve ever seen done,” he said at a clean energy summit in New Brunswick last month. “They didn’t put the numbers of what it would cost the ratepayer or industry.”
Like the bully on the playground, someone has got to take Mr. Martin on. He can not be allowed to go around trashing things and people he knows so little about.
Although I trained in planning at Cornell’s Graduate School and was a DEP planner and policy analyst for 13 years, I am no expert on the EMP and economic modeling. But it might as well be me because I don’t see any profiles in courage out there stepping up to the plate and taking on Bully Bob Martin.
The economic analysis of the EMP was conducted by Rutgers University (see: Updated Modeling Document) :
The Center for Energy, Economic and Environmental Policy (CEEEP) and the Rutgers Economic Advisory Service (R/ECON™), both located within the Edward J. Bloustein School of Planning and Public Policy of Rutgers, the State University of New Jersey, have been tasked by the New Jersey Board of Public Utilities (BPU) to provide data and modeling support for the master plan effort.
The data for the U.S. used come from Global Insight, Inc., a national leader in economic forecasting
The economic analysis was based on econometric and energy models used widely in NJ. The modeling and economic analysis were extensively reviewed during a 2 year planning process:
A series of prior events helped to build the foundation for this report. On December 18, 2006, CEEEP and R/ECON™ presented the modeling framework used in this report to stakeholders. On January 5 and 19, 2007, CEEEP convened two technical working groups to elicit input on electric generation and transmission. In addition, CEEEP and R/ECON™ participated extensively in many stakeholder meetings convened as part of the Energy Master Plan process from late 2006 through September 2008.
The electric utilities and the business community participated in the EMP model development, planning, and economic analysis.
If the Rutgers economic analysis “was one of the worst pieces of analysis ever done” as Martin now claims, where were the energy industry experts and business community economists and why weren’t they raising objections to correct such a flawed piece of work?
A valid critique of the EMP analysis would focus on its failure to include billions of dollars in economic benefits and avoided costs of dirty coal power and global warming, which should be right up Martin’s alley as DEP Commissioner. But he is silent on these flaws because they make a stronger case for efficiency and renewables, while his objective is to gut those policies for short term economic rewards to the business community.
Martin is simply taking cheap shots by using after the fact economic conditions (i.e. dramatic drop in oil and gas prices; economic recession; reduced demand).
Martin’s severe criticism shows he’s not only a political cheap shot artist, but that he knows nothing about economic modeling, sensitivity analysis, scenario testing, or the role of models in planning. As the EMP itself explained, models are not precise and uncertainties are inherent in the modeling exercise:
In short, the Energy Master Plan must explicitly deal with uncertainty and the prospect that things will turn out differently from what was assumed. This often gets lost in the discussions as modeling is frequently assumed to be a forecasting effort with definite outcomes. The data and modeling assumptions have associated ranges of uncertainties. Even in situations in which one would think the range of uncertainty should be small, e.g., the cost of a combustion turbine, they can be surprisingly large. These uncertainties need to be considered when evaluating calculations. Although models calculate numbers to a precise value, this “precision” is a programming artifact and must be understood as such. What also should be kept in mind is that the range of uncertainty varies with specific assumptions. The uncertainty in the cost of a combustion turbine is smaller than the uncertainty of the cost of off-shore wind, which is in turn smaller than the uncertainty associated with the cost of a new nuclear power plant.
A primary driver for the current modeling draft calculations is the assumptions about the cost and magnitude of energy efficiency and demand response for electricity and natural gas. If one assumes that energy efficiency and demand response are cost-effective (which numerous studies have concluded) and that state policies can successfully influence energy efficiency and demand response, then one does not need modeling to conclude that energy bills will decrease, environmental impacts will be lessened, and the New Jersey economy will not be harmed. The modeling provides the order of magnitude, confirms the intuition, and helps target policies that can help to make these outcomes more likely. Thus, the preliminary calculations to date reflect the assumptions that they are based upon.
Here are the details, for Mr. Martin’s edification (and I question whether he has even read the EMP and reviewed the modeling):
(see above link):