Public Service Electric & Gas has reached agreement with state regulators to spend $1.9 billion to replace much of its aging gas pipeline system under a deal that could be approved by the New Jersey Board of Public Utilities as early as Wednesday.
The stipulated settlement, reached among BPU staff, the state Division of Rate Counsel, and others, would allow the state’s largest utility to replace hundreds of miles of cast iron and steel pipes over the next five years with new gas mains.
The proceeding is the latest by PSE&G to modernize its pipeline system, which has the most cast-iron pipes of any utility in the nation. Those pipes also are the most likely to leak, releasing methane, a potent source of greenhouse-gas emissions, into the air.
The settlement also is significant in that it is just one of several cases involving the utility and its owner, Public Service Enterprise Group, that could have an impact on how much ratepayers pay on their monthly bills.
The most controversial, by far, is legislation () that would have customers of all four electric utilities in New Jersey pay up to $300 million a year to prop up PSEG’s three nuclear units in South Jersey. It is from Gov. Phil Murphy, as is another bill ( ) that would boost ratepayer bills to promote solar and other clean-energy programs.
Initially, PSE&G sought to spend $2.7 billion to accelerate replacement of its cast-iron and steel pipes, part of an industry-wide effort to modernize gas pipelines, in some cases digging up mains installed more than a century ago.
“We are seeing this kind of activity around the country,’’ said Paul Patterson, an energy analyst with Glenrock Associates in New York City. “People are worried about safety and the impact of methane emissions.’’
In New Jersey, the efforts have won support from regulators. The investments come at a time when historically low natural gas-prices have eased the impact of those costs to utility customers. PSE&G had previously won approval for a three-year, $900 million gas modernization program.
“We’re pleased to reach agreement on the next phase of our gas modernization program,’’ said Karen Johnson, a spokeswoman for the utility. “We look forward to the BPU’s approval so that we can begin planning the work which will start in 2019 and which will continue for five years.’’
The tentative agreement is scheduled to be considered by the BPU at its next monthly meeting on Wednesday. The settlement is typically approved by the five commissioners once its staff and New Jersey rate counsel agree on the terms of the agreement. Labor unions and the Environmental Defense Fund also signed the agreement.
Not everyone, however, is on board. AARP of New Jersey declined to sign the settlement as did Steven Goldenberg, attorney for the New Jersey Large Energy Users Coalition, a group representing large pharmaceuticals and other manufacturers.
Goldenberg, whose group had backed the previous gas modernization proposal put forth by PSE&G, opposed the current iteration as very expensive. He urged the board to consider the impact of the array of PSE&G programs awaiting action by the board, including the proposed nuclear subsidy, a separate gas and electric rate case pending before the agency, and expected proposals to finance new energy efficiency programs and hardening of its power grid.
Ev Liebman, associate director of AARP New Jersey, agreed.
"Too many people, including seniors, are struggling to pay their utility bills, and this is not the only increase on the table," Liebman said. "PSEG is pushing for a $300 million a year nuclear tax and a base-rate increase."
The original version of this story said the settlement amounted to $1.6 billion.