PSE&G to Start Making Its $2.6B Case for Hardening Infrastructure

Tom Johnson | September 12, 2013 | Energy & Environment, Sandy
Parties pro and con seem able to agree on one thing: Something must be done to protect customers against widespread outages

Credit: Amanda Brown
BPU Commissioner Joseph Fiordaliso
In a test of what the state will allow utilities to spend to make their systems more resilient to extreme weather, Public Service Electric & Gas will begin stating its case to spend $2.6 billion over the next five years to harden its infrastructure.

Public hearings on the proposal begin Monday in Newark at Essex Community College. The issue has aroused a great deal of interest from various sectors in the state — from businesses, who view it as absolutely necessary, to consumer advocates, who fear it will spike what they say are already high energy bills.

Despite the controversy, there is still widespread consensus among many that the state needs to take aggressive action to prevent widespread outages, like those that occurred during Hurricane Sandy this past October, when more than 7 million people were left without power, some for more than a week at time.

PSE&G, the state’s largest gas and electric utility, was the first to submit a program to enhance its gas and electric system, filing a petition with the New Jersey Board of Public Utilities last February. The proposal initially sought to spend $3.9 billion over 10 years, addressing many of the problems that surfaced during last fall’s superstorm.

In the proceeding currently being heard by BPU Commissioner Joseph Fiordaliso, the agency will only focus on the first five years of the proposed spending plan.

The agency already has initiated two proceedings — one to determine how to allocate storm restoration costs among utilities, the other to assess how best to harden the power grid. A big emphasis will be on how to prevent utility switching stations and substations from flooding, which occurred at dozens of sites during Sandy, leaving hundreds of thousands of customers without power.

At a BPU meeting earlier this summer, commissioners vowed to take action to reduce widespread outages during extreme storms such as Sandy. “Are we going to eliminate the lights going out all the time,’’ said Fiordaliso. “No, but we can improve.’’

In PSE&G’s case, the utility is proposing to spend $1.7 billion on 31 switching and substations located in Sewaren, Newark, Linden, Bayonne, and Hoboken, all of which serve densely populated areas.

In its petition, PSE&G argued that its billion of dollars in investments would not boost rates, primarily because of historically low natural gas prices and the winding down of surcharges on utility bills stemming from the deregulation of the energy sector back in 1999.

That view is questioned by consumer advocates, who say customers should see a drop in electric bills with lower gas rates and the elimination of energy deregulation surcharges. In a statement issued this past April, however, BPU President Bob Hanna said the PSE&G $3.9 billion proposal could end up boosting utility rates by 8 percent, a view disputed by the company.

The PSE&G proposal is one of several pending before the regulatory agency. In Newark tomorrow, Jersey Central Power & Light begins evidentiary hearings on its own rate increase request to increase revenue by $31.5 million.