PSEG Power Reports $135M in Damages Due to Hurricane Sandy
Despite damages, company still reports 5-cent-per-share increase in operating earnings during Wall Street call.
PSEG Power, one of the largest generators of electricity in the region, suffered $135 million in damages to its power plants during Hurricane Sandy, according to company executives.
So far, the company, a subsidiary of Newark-based Public Service Enterprise Group, has recouped $44 million of those costs from insurers, and has restored power to the big plants affected by the storm, according to Ralph Izzo, chairman, president, and chief executive officer of PSEG.
The two biggest stations are a 1,230-megawatt natural gas plant in Linden and one of the company’s nuclear units in Salem County, both of which are now repaired and operating. Other peaking units in northern New Jersey also were affected by the storm, but may or may not be returned to service. Peaking units provide power on high-demand days, typically during a summer heat wave.
Izzo and other executives detailed the damage assessments during a quarterly earnings call with Wall Street analysts yesterday morning. The company’s operating earnings still increased to 48 cents per share compared with 43 cents per share in the second quarter of the previous year.
Analysts said the damage suffered by the company is not likely to have much of a fiscal impact on PSEG. “Those numbers are not large for company the size of PSEG, when you factor in the insurance proceeds,’’ said Paul Patterson, an energy analyst at Glenrock Associates in New York.
In addition, the company has told PJM Interconnection, the independent operator of the regional power grid, that it plans to retire approximately 1,700 megawatts of peaking plants.
In a press release, however, Izzo said post-Sandy work has restored operations sufficiently at its peaking units to support maximum summer demand. No big problems emerged during the latest heat wave, in which temperatures exceeded 90 degrees for nearly a week.
In response to a question during a media call, Izzo said the company has yet to decide what other plants to retire. Beyond the storm damage, the plants face tougher environmental regulations that could force them to close.
In other matters, Izzo said the company is hopeful the New Jersey Board of Public Utilities will make ato harden its utility infrastructure by year's end. “I still remain hopeful and optimistic we’ll have some action by the end of the year,’’ he said.
The proposal, filed this past February, outlines ato make PSEG's electric and gas grid more resilient to extreme storms, such as Hurricane Sandy. Much of the expenditures would go to elevating or protecting utility substations and switching stations from flooding, which caused many of the outages during the storm.
Dubbed Energy Strong, the proposal is backed by 55 municipalities and five counties, according to Izzo. During Sandy, 7 million people throughout New Jersey, not all of them in Public Service Electric & Gas’s territory.
How the state is going to reinforce the power grid is the subject of an ongoing proceeding before the BPU, which has to juggle how to make the system more resilient to big storms with costs to electric and gas customers.
The issue has become a top priority of the Christie administration. Among other things, it has set aside up to $100 million in clean energy funds to promote the development of combined heat and power (CHP) plants, which it views as a way to maintain power at critical facilities, such as hospitals and wastewater treatment plants, during extreme weather.