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State BPU Gives the Nod to PSE&G’s $95 Million Energy-Efficiency Initiative

NJ’s largest utility to concentrate efforts on hospitals, schools, apartment buildings, and small businesses

BPU Joseph Fiordaliso
Credit: Amanda Brown
Joseph Fiordaliso, commissioner of the NJ BPU.

Public Service Electric & Gas yesterday won unanimous approval of a new $95 million program to reduce energy use at hospitals, healthcare facilities, multifamily units, and for the first time in years to offer assistance to small-business customers in urban areas.

The authorization by the New Jersey Board of Public Utilities clears the way to continue a popular energy-efficiency program that the Newark utility already has invested $227 million in, to help hospitals, schools, municipal facilities, and apartment buildings save energy and money.

PSE&G has been the most aggressive of the state’s utilities in promoting energy efficiency, a strategy that affects its bottom line by reducing the amount of electricity and gas its customers use.

BPU officials want to encourage more programs by other utilities that complement its own energy-efficiency efforts, but some observers say it is not likely to happen on a bigger scale unless major changes are made in the traditional utility business model. Based on how much energy is delivered to customers, the system discourages investments in energy efficiency, according to clean-energy advocates.

“These are the kind of programs that we have to promote to all utilities across the state,’’ said BPU Commissioner Joseph Fiordaliso.

Under the initiative approved yesterday, $45 million will be allocated to 12 hospitals on a waiting list that missed out on previous rounds of the PSE&G program. Hospitals, heavy users of energy, have been hard-pressed to come up with the money to finance projects to reduce electricity and gas use. PSE&G will fund the upgrades upfront; the hospitals will repay the cost over time on their utility bills.

Of the total amount, $10 million will be set aside to develop combined heat and power (CHP) plants at hospitals -- a strategy that would allow them to continue to run in the event of a major storm. During Hurricane Sandy, some facilities were forced to evacuate patients because of lengthy outages caused by the storm.

Another $35 million would be targeted to reducing utility bills at multifamily housing units; approximately 45 of these units are on the waiting list.

The final $15 million will continue to support energy-efficiency projects for government and nonprofit groups, as well as for small businesses in urban enterprise zones.

“These three programs are targeted at segments that can achieve significant bill reductions from energy-efficiency programs but were held back from making these investments for a number of reasons,’’ said Joe Forline, vice president of customer solutions for PSE&G.

The utility estimates that the $95 million investment will save enough electricity to power more than 7,000 average-size homes annually and save enough natural gas to supply nearly 3,000 homes each year.

The goal of reducing energy use is a key component of the state’s Energy Master Plan. Not only will it save consumers and businesses money, but it could also improve air quality by running power plants, which spew emissions that contribute to smog and global climate change, less frequently.

BPU President Richard Mroz said the PSE&G program also will make facilities more resilient in the event of widespread outages by allocating money to help develop CHP plants at critical healthcare facilities. This type of local power generation should keep on operating even after big storms.

“The efficiency improvements made through these programs will benefit all ratepayers by reducing existing demands on the electric power grid,’’ Mroz said.

BPU Commissioner Mary-Anna Holden agreed. “It continues a successful, award-winning program,’’ she said.

The state reached a settlement in the case earlier this year, with both the staff of the BPU and the Division of Rate Counsel signing on to the agreement with PSE&G.

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