PSEG Power Has No Plans to Add Generating Capacity in the Near Term
Company is counting on trio of natural-gas plants scheduled to come online in next few years to put generation where it needs to be
With three new natural-gas power plants in the works, PSEG Power is not looking to add more generation in the foreseeable future.
While adding the caveat “never say never,’’ Ralph Izzo, chairman, president, and chief executive officer of Public Service Enterprise Group, said he does not anticipate any new investment in the conventional power business during the company’s quarterly earnings call with analysts Friday.
PSEG Power’s natural-gas fleet will have more than 5,000 megawatts of capacity in 2016 -- more than the nuclear units operated by the company, according to executives. The nuclear plants provide roughly half of the electricity used in New Jersey.
The three new gas units include a 540-megawatt facility at its existing Sewaren site, which is expected to be operational in the summer of 2018. A 755-megawatt plant in Maryland is also scheduled to go into service that year, and a 455-megawatt natural-gas combined-cycle plant in Bridgeport, CT, is targeted to be operational in 2019.
Together, the three gas plants represent an investment of $2 billion. “I’m excited about Power’s positioning,’’ Izzo said, adding the company’s focus on expanding its combined-cycle plants is being driven by natural gas found in new shale deposits in Pennsylvania and neighboring states.
The state’s Energy Master Planon expanding New Jersey’s reliance on natural gas, with the expectation that the drop in prices for the fuel will lead to lower gas and electricity bills for consumers and businesses.
During the call, Izzo said at some point in the future, he could see PSEG Power separating from the parent and operating as a standalone business.
“Over time, the tactical benefits of staying together decrease and the strategic benefits of separating increase,’’ Izzo said, declining to be pinned down on a timeframe. ”We’re not there yet.’’Izzo also said that eventually, within a five-year time span, the company may retire its coal plant in Bridgeport when the new gas unit is built. Asked about the company’s two coal-fired stations in Hudson and Mercer counties, Izzo there are no plans to retire either of those units.
The company will continue its strategy of building grid-sized solar farms in New Jersey with an emphasis on brownfields and landfills, as well as other big solar projects, he said. He expects a continued investment of $100 million to $200 million a year for those projects.
But Public Service Electric & Gas, its gas and electric utility, will continue to be the main driver of profits for the Newark company, as it has for the past several years. The utility now accounts for 60 percent of the overall business and is expected to invest $8.3 billion over the next three years in resiliency and modernization projects.
To that end, Izzo said company executives and staff of the Board of Public Utilities have been engaged in discussions on how to set up more longstanding investment programs for the utilities, particularly on the gas side. PSE&G, as well as other companies, is seeking to replace aging cast-iron pipes with more durable plastic mains.
“It’s a very constructive dialogue right now,’’ Izzo said.