PSE&G Seeks to Spend $1.6B Bringing Natural-Gas Mains into 21st Century
Utility's parent, PSEG, details plans to invest $13B over next five years at annual investor conference
- Credit: NJTV News Online
Public Service Electric & Gas is proposing to spend $1.6 billion to modernize its aging natural-gas mains, which deliver fuel to its 1.9 million customers in the state.
The filing, made late Friday to the New Jersey Board of Public Utilities, was first disclosed at an annual investor conference in New York City, an event where Public Service Enterprise Group, PSE&G’s parent, detailed plans to invest up to $13 billion in capital over the next five years -- $10.8 billion allocated to the utility.
The proposed investments come on top of other huge projects undertaken by PSE&G recently, including a $1.2 billion program to beef up the resiliency of its gas and electric infrastructure. It also has a more-than-$100 million plan to fund energy efficiency initiatives pending before the agency.
The latest proposal raised some concerns among consumer advocates who worry what impact of the investment would have on customers’ utility bills, already among the highest in the nation.
“We’re not opposed to replacing aging gas mains,’’ said Stefanie Brand, director of the state Division of Rate Counsel. “The only question is this the right amount? Is it the right way to do it?’’
“This is a lot of money again,’’ added Ev Liebman, associate director of New Jersey AARP. Noting that the state already has approved more than $300 million to upgrade the utility’s gas infrastructure under the so-called Energy Strong program, she commented that the regulators need to make sure the money is being well invested.
But company executives argued that the time is right to make the investments. Ralph Izzo, chairman, president, and chief executive officer of PSEG, said the company will be able to make significant investments in its infrastructure with a minimal impact on customers’ bills.
With much lower natural-gas prices, customers who get their gas from PSE&G have seen their bills drop by 44 percent since 2008, according to Ralph LaRossa, president and chief operating officer of the utility. Overall, bills for the 90 percent of customers who both get their electricity and gas from the utility have declined by 23 percent, Izzo said.
“We are in a time of unprecedented low interest rates and natural gas prices,’’ LaRossa said. “The timing is right to make these infrastructure investments.’’
BPU officials echo that argument and have made upgrading an aging electric- and gas-grid infrastructure a top priority -- as evidenced by approving the $1.2 billion Energy Strong program proposed PSE&G, although is was less than what the utility asked for originally.
Under PSE&G’s latest proposal, it would replace approximately 160 miles of cast iron and unprotected steel gas mains over five years and steel lines to homes and businesses over five years. The mains and service lines would be replaced with plastic piping, which is much less likely to leak and release methane gas, a potent source of greenhouse gas emissions.
Jeff Tittel, director of the New Jersey Sierra Club and a frequent critic of PSE&G, said on this issue his organization can agree with the utility. “It reduces leaks that are currently being wasted,’’ he said. “It’s good for the environment and it’s good for ratepayers.’’
Paul Patterson, an energy analyst with Glenrock Associates in New York, said the proposed investments by PSE&G to upgrade its gas infrastructure make sense. “They are making capital investments to meet the goals of New Jersey,’’ he said, noting utilities in other states are making similar investments. These are goals that people want.’’
The $13 billion the company intends to invest through 2019 will be primarily on transmission projects and other critical infrastructure maintained by its electric and gas utility, according to Izzo.