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State Agency Sets Date for Hearing on PSE&G's Grid Upgrade Plan

Possible delays could push improvements to power and gas infrastructure into next year's hurricane season.

BPU Commissioner Joseph Fiordaliso
Credit: Amanda Brown
BPU Commissioner Joseph Fiordaliso

Here’s some potentially good news for customers of the state’s largest utility -- at least in the short term.

The New Jersey Board of Public Utilities likely will not make a decision until early next year on a proposal from Public Service Electric & Gas to spend $2.6 billion to make its electric and gas systems more resilient to extreme weather.

In an order issued late last week, but not made public until Monday, BPU Commissioner Joseph Fiordaliso scheduled public hearings on the proposal for this fall, but has set early January for evidentiary hearings. Fiordaliso is the officer in charge of case, which is conducted in a quasi-judicial proceeding, in which witnesses testify and are cross-examined by so-called interveners.

The settlement of what is shaping up to be a highly contentious case is not likely to happen before November’s election. It is too much of a politically charged issue, which few are likely to embrace because of its potential impact on utility customers in an election year.

If so, the case could drag on until this spring or later, delays that may push improvements to the utility’s infrastructure into next year's hurricane season. It could also lead to the Democratic-controlled Legislature enacting its own measures to harden the power grid, preempting the BPU’s efforts.

“Given the nature of the quasi-judicial proceeding, a quality of patience is required,’’ Paul Patterson, an energy analyst at Glenrock Associates in New York, said diplomatically. “The longer the process, the longer it will take for these projects to be completed.’’

PSE&G, however, said it was pleased to have a schedule set by the board. “Hopefully, there will be meaningful opportunities for settlement discussions as the year progresses,’’ said Karen Johnson, a spokeswoman for the utility. “It’s obvious that the longer it takes to make a decision, the later we’re able to start the work of strengthening our infrastructure against severe weather.’’

PSE&G is seeking to have customers pay for the program beginning in January 2014 in a petition it filed last February with the agency. The utility claims customers’ bills will remain relatively flat, primarily due to low natural gas prices and the winding down of ratepayer surcharges stemming from the deregulation of the energy sector more than a decade ago.

Any delays would be a disappointment for New Jersey’s largest utility, whose top executive Ralph Izzo told reporters last week that it hoped wrap up the case by the end of this year, following an earnings call for Public Service Enterprise Group, the utility’s parent.

PSE&G initially filed a petition to spend $3.9 billion over the next decade to overhaul and make its electric and gas systems more resilient to powerful storms, such as Hurricane Sandy, which left 1.9 million of its customers without power last October. The case pending before the agency addresses only the first five years of the spending plan, or $2.6 billion.

The proposal is widely backed by many in the business community, but has raised concerns among consumer advocates and environmentalists, who fear it could spike costs for ratepayers in a state with some of the highest energy costs in the country, as well as undermine efforts to promote renewable energy and distributed sources of generation, such as solar power.

The PSE&G case is important because it is likely to set the framework for what other utilities must do to make their power systems more resilient to storms, like last fall’s superstorm, which left 7 million people in the state without power, some for more than a week at a time.

The BPU has launched two separate other proceedings to deal with the issue, one to determine what other utilities need to do to upgrade their infrastructure, and, a separate one to decide how the state’s utilities recover costs for damage inflicted on their infrastructure by bad storms. The latter are projected to exceed $1 billion stemming from Hurricane Sandy, according to estimates by state officials.

Needless to say, utility bills will be going up in the near future, if all of these costs are approved by the BPU.

Two environmental groups seeking to intervene in the case -- the New Jersey Sierra Club and New Jersey Environmental Federation -- were granted participant status, a distinction that does not allow them to cross-examine witnesses in the case and have their own witnesses testify.

Jeff Tittel, the director of the Sierra Club, said the organization will appeal the decision by Fiordaliso not to grant it intervener status, noting a similar membership-driven organization, AARP, was allowed to intervene. PSE&G opposed the two environmental groups intervening, arguing that they sought to raise issues, primarily energy efficiency and renewable energy, that are not the subject of the filing.

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