PSE&G May Ratchet Down Price of Multibillion-Dollar ‘Energy Strong’ Program

New engineering analyses on hardening substations could mean 15 percent cut in customer subsidies

PSE&G's Fanwood substation, which was heavily damaged during Sandy.
Public Service Electric & Gas is revamping plans to harden its power grid based on new engineering analyses of its utility substations, changes that may lower the cost of the multibillion dollar program to its customers.

In a more than 700-page filing to the New Jersey Board of Public Utilities, the Newark utility is now recommending that all but two of the 28 substations targeted for upgrades be raised and rebuilt to prevent flooding of the facilities, which wiped out power in the aftermath of Hurricane Sandy to hundreds of thousands of customers.

In February, the state’s largest electric and gas utility filed with the agency a $3.9 billion so-called Energy Strong program, a 10-year effort to protect its infrastructure from extreme weather and natural disasters. Its initial proposal before the BPU envisions spending $2.6 billion over the next five years, much of which would go to work involving utility substations.

The proposal has come under fire from the New Jersey Division of Rate Counsel, consumer advocates, and others, who question whether utility customers can afford to pay for those investments, especially in a state with some of the highest electric prices in the nation.

In response, PSE&G has undertaken a more detailed engineering analysis of what needs to be done in a cost-effective manner to protect the substations, ranging from raising and rebuilding them, eliminating and moving them elsewhere, to building flood walls or berms around them

The analysis, while not yet complete and awaiting more in-depth onsite inspections, could lower the cost of the approximately $780 million utility-substation upgrades by much as 15 percent, according to Jorge Cardenas, a vice president of asset management and centralized services for PSE&G.

In its original filing with the BPU, the utility proposed that four of the substations be protected with new flood walls, another five eliminated, and 19 others be raised and rebuilt. Utility substations shunt electricity from high-voltage transmission lines to distribution wires used to bring power to homes and smaller businesses.

In its latest filing with the agency, PSE&G is proposing to build only one flood wall around a substation, eliminate only one other, and rebuild and raise 26 other facilities, Cardenas said.

In some cases, eliminating a substation, which already has the cable, wiring, and underground circuits in place would be more expensive than moving it elsewhere. In some cases, doing so would cost tens of millions of dollars, according to the utility.

“It is just a better solution to rebuild and raise it, than to eliminate it,’’ Cardenas said.

Whether the BPU and critics of the Energy Strong program agree remains to be seen. Hearings on the initial five-year program are expected to begin next year, although there is a remote possibility a settlement on the proposal could be reached among the various interveners in the case.

Even without BPU approval, the utility has addressed three other substations that are either critical to maintaining reliability of the power grid or had to be dealt with in order to proceed with other upgrade projects, according to Cardenas.

Yesterday, PSE&G announced in a press release that support for the effort to harden the grid was growing, with 76 municipalities and nine counties passing resolutions supporting the proposal.

Besides upgrading utility substations, PSE&G’s plan includes adding new backup power lines, making the electric grid smarter to help identify problems and restore service quicker to customers who lose power, and strategically burying some wires and modernizing its gas distribution system, particularly in flood-prone areas.