State Agency Clears PSE&G for Preliminary Work on Hardening Grid

Guarded go-ahead centers on protecting electric switching and substations swamped in storm surge

The state is telling Public Service Electric & Gas to begin preliminary design and engineering work on plans to fortify 31 electric switching and substations flooded out during Hurricane Sandy, an event that left hundreds of thousands of its customers without power for days.

The order from the New Jersey Board of Public Utilities deals with probably the most comprehensive element of the Newark utility’s $3.9 billion Energy Strong plan, a proposal aimed at reducing widespread power outages during extreme weather, such as Sandy.

The petition has generated much support and just as much controversy since it was submitted to the regulatory agency, which has committed to taking steps to harden the power grid. Doing so could keep as many as 2.7 million customers from losing power, as they did last fall after the superstorm devastated much of New Jersey.

At a time when the state suffers from some of the highest energy bills in the country, just how aggressive the BPU will be in mandating upgrades to the power grid remains to be seen. The agency already has initiated two proceedings to determine how to allocate storm restoration costs among utilities, which run into the hundreds of millions of dollars, and another one to decide how best to harden the power grid. Those costs also won’t be cheap, as PSE&G’s proposal demonstrates.

BPU President Bob Hanna noted making improvements to switching and substations are a key element in the state’s efforts to improve reliability during big storms, which he and others are probably part of the new “normal.’’

During Hurricane Sandy, 58 substations around the state were flooded by the enormous storm surges, knocking out power to tens of thousands of customers at each event. In some cases, the outages caused other major problems, such as the flooding of the Passaic Valley Sewerage Commission plant in Newark, which led to hundreds of millions of gallons of raw sewage flowing into the state’s waterways.

“Our goal is to find effective solutions so when the next storm hits, the people of New Jersey are protected,’’ said Hanna, during the agency’s monthly meeting held Friday in the Statehouse annex.

A range of options are envisioned to protect the substations and switching stations — such as erecting floodwalls, installing berms, and elevating the structures so they do not flood during extreme weather, Hanna noted.

“This is a work in progress,’’ he added. “We do need to get this moving.’’

Fellow BPU Commissioner Jeanne Fox agreed. “Climate change is happening. We need to deal with it,’’ she said.

But BPU Commissioner Joseph Fiordaliso cautioned that no matter what the state orders, customers will still experience outages. “Are we going to eliminate the lights going out all the time? No, but we can improve,’’ he said.

While giving the state’s largest electric utility the go-ahead to begin investigating potential mitigation measures and engineering work to prevent the facilities from flooding, the board still must approve any measures PSE&G recommends, according to Jerry May, director of the BPU’s Division of Energy.

PSE&G has projected the cost of protecting the switching and substations at $1.7 billion, which would include major facilities in Sewaren, Newark, Linden, Bayonne, and Hoboken that serve densely populated areas.

Under the BPU’s order, the utility will commence site assessments and best options for protecting each facility, according to May. The assessments will explore the cost-benefits of each option, as well as requiring PSE&G to identify what permits would be required on the local, state, and federal levels, he said.

Meanwhile, the bulk of PSE&G’s $3.9 billion Energy Strong proposal remains on hold. It has won significant support from some members of the business community, but spurred criticism from the New Jersey Division of Rate Counsel, some industry groups, and the New Jersey chapter of the AARP.

With natural gas prices at historical lows and the elimination of customer surcharges stemming from the deregulation of the electric industry in 1999, the utility said that even with the billion of dollars in expenditures, customers’ rates would remain flat, or even drop from what bills cost consumers this past February.

Some dispute that view, including Hanna, who in April told a legislative committee that the proposal would boost rates by 8 percent.