PSE&G Wants $1.7 Billion to Keep Electricity Substations High and Dry

Tom Johnson | October 23, 2013 | Energy & Environment, Sandy
Utility says raise-and-rebuild strategy makes most sense after Sandy's tremendous storm surges

PSE&G's Fanwood substation, which was heavily damaged during Sandy.
If the state wants to avert extensive power outages in the future, most experts agree that utility substations cannot flood during storms like Hurricane Sandy. Flooding occurred repeatedly at these facilities, leaving hundreds of thousands of customers without electricity when some stations were under up to six feet of water.

The $1.7 billion question is what will it cost to protect them.

That is the rough estimate Public Service Electric & Gas projects as the price for protecting 91 of its substations over the next decade, a cost that has come under scrutiny and raised concern among regulators and participants in a pending rate case before the New Jersey Board of Public Utilities.

Utility switching and substations are used to move electricity from high-voltage transmission lines to distribution wires to bring power to homes and businesses.

After Hurricane Irene struck the state in 2011, PSE&G commissioned a consulting firm, Black & Veatch, to examine what could be done to protect 10 of its utility substations from flooding. Its conclusion: building mostly berms or other barriers could provide the recommended flood protection for the facilities at a cost of $10.1 million in 2012 dollars.

In a response to questions raised by the BPU staff, however, those costs have ballooned to as much $249 million, according to a new filing by PSE&G. What changed? Hurricane Sandy, utility officials said.

“It’s a brand-new reality,’’ said Jorge Cardenas, vice president of asset management and centralized services for the state’s largest gas and electric utility. “The way we thought prior to Hurricane Irene no longer holds.’’

The utility noted that the tremendous storm surges associated with the most recent hurricane and probable future storms suggest that for a number of stations, the rebuild-and-raise option — including building a concrete platform to raise equipment above Federal Emergency Management Agency flood maps — is the most appropriate strategy. Those maps, however, do not anticipate rising sea levels, a failing Cardenas acknowledged.

New Jersey Division of Rate Counsel Stefanie Brand said her agency is not opposed to enhancing the resiliency of the power grid, but is looking at what measures can be taken at a much lower price.

“Here’s what we need to see,’’ Brand said. “We want to look at the costs; look at the alternatives; look at the secondary consequences (from flooding upstream); and what will give us the best result at the best price.’’

Instead of building some type of walls around the facilities, the utility told the agency it needs to rebuild and raise six of the stations to protect them from being flooded during extreme storms — at a cost ranging from $13 million to as much as $34 million.

Only one of the substations identified in the Black & Veatch report would have a flood wall installed at a cost of $3 million.

In four other cases, the utility plans to eliminate substations entirely and redirect electricity to other facilities. Even that will not be cheap. For instance, it is expected to cost $67 million to eliminate a substation in Cranford, a facility adjacent to the Rahway River, and one especially hard hit by Sandy.

The utility looked at a flood wall option there, but dropped it because it would increase water moving upstream, a problem also associated with five of the 10 substations the Black & Veatch report examined.

Why is it so expensive to eliminate the station? Cardenas said the cost of moving miles of cables, underground circuits, and other equipment to ensure reliable service to those customers from other substations is a “major undertaking.’’

Overall, in the first years of the program, the utility says it could cost upward of $800 million to rebuild the substations, to put flood walls around them, or to eliminate them entirely and bolster nearby units to handle the additional demand.

Costs range from as low as $6 million to build a flood wall around its Little Ferry substation to as much as $91 million to eliminate its Bayway substation in Elizabeth, which suffered extensive flooding during Irene, Sandy, and other storms.

Jeff Tittel, director of the New Jersey Sierra Club, a participant in the PSE&G case, argued the costs to harden the power grid are readily apparent, saying the more the utility spends the more it will earn for its shareholders. “There’s an incentive to spend more instead of spending better,” he said.