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Hurricane Sandy: Wake-Up Call for NJ Utilities

Of all the proposals, building redundancy into the grid looks to have the best chance of keeping the lights on next time.

The devastation left behind Hurricane Sandy poses huge challenges for the state -- not the least of which is how best to prevent future storms from leaving 2.7 million customers without power, some thousands of whom still lack electricity or gas on the barrier islands along the coast.

In the more than a month since the storm hit, there has been no shortage of proposals to prevent disaster from striking again. The recurring questions are whether any of the schemes will work, and at what cost to ratepayers, who ultimately bear the cost.

Those plans range from requiring utilities to install so-called smart meters in customers' homes and businesses; ordering gas stations and other facilities to buy backup generators; and forcing Jersey Central Power & Light to withdraw a $31.5 million rate increase it submitted to the Board of Public Utilities last week.

To utility executives and some state officials, however, most proposals will do little to enhance restoration efforts. Utilities, however, say they will implement smart meters, if ordered, as a way of improving much-criticized communication with customers and local officials.

It all comes down to a policy decision as to where the state should allocate finite ratepayer dollars to deal with major storms, a problem most conceded will certainly happen again, and again in the future.

What needs to be done, according to some utility executives, is to build more redundancy into the power grid. More substations to back up those that flood or otherwise are knocked off line. More switching stations, which convert high-voltage electricity from transmission lines to distribution lines that send electricity to homes and businesses, also are needed.

But these solutions are not cheap. The cost of redundant switching stations could run up to $100 million, according to Ralph LaRossa, president and chief operating officer of Public Service Electric & Gas.

“The more redundancy we have in the grid the less the lights go out,’’ LaRossa told the Assembly Utilities and Telecommunications Committee, which had a parade of utility executives talk about Hurricane Sandy and the response to the storm.

Stefanie Brand, director of the New Jersey Division of Rate Counsel, a frequent critic of PSE&G, echoed his comments. Brand argued smart meters, also called advanced meter infrastructure, do not add anything to reliability or restoration efforts.

“If we’re going to spend $1 billion, it would be better spent on shoring up substations,’’ Brand said. She argued for a measured approach to dealing with Sandy, noting that every solution will ultimately be funded by ratepayers.

For instance, the cost of installing smart meters in homes is likely to approach $1 billion, Brand said. JCP&L would account for about $400 million of that cost, while PSE&’s expense would amount to $500 million.

“It’s not going to be the cure-all for restoration,’’ said Vince Maione president of Atlantic Electric, a utility serving 550,0000 customers in south Jersey

LaRossa conceded smart meters are expensive, but noted the industry ‘’looks silly’’ by failing to communicate quickly in a time when technology allows consumers to talk with one another almost instantaneously. LaRossa said a decision to adopt smart meters needs to be a joint policy decision between regulators and the utilities.

Other utility executives also backed LaRossa’s recommendation to adopt more stringent tree-trimming plans to reduce power outages in suburban areas.

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