New Reports on Climate Change Could Bolster PSE&G’s Rate Case

Tom Johnson | March 7, 2014 | Energy & Environment
According to independent research, climate change puts serious strain on energy supplies, echoing utility's argument before BPU

Credit: Amanda Brown
JCP&L's substation in Tewksbury, Hunterdon County.
With hearings about to end on a petition by Public Service Electric & Gas to spend $2.6 billion to harden its power infrastructure, the utility could be encouraged by the release of independent reports saying climate change poses a serious strain on energy supplies.

It is an argument the Newark company frequently has made during the hearings before the New Jersey Board of Public Utilities, which are expected to end today. PSE&G noted that the three worst storms in its more than century-old history, which left millions of customers without power, all occurred in the past 18 months.

The reports, prepared for the U.S. Department of Energy and by the U.S. Government Accountability Office, suggest that existing energy production and use are at risk of cascading failures.

Further, it argues that the nation’s energy infrastructure is “increasingly vulnerable’’ to a range of impacts from climate change.

Cascading failures certainly occurred during Hurricane Sandy, with dozens of PSE&G’s utility substations flooded by unprecedented tidal surges, in each case knocking out power to tens of thousands of customers, if not more.

It is a refrain often raised by the utility during the Trenton hearings on its so-called Energy Strong proposal.
Although settlement negotiations are still being conducted, if no agreement is reached the case goes before the full BPU, an outcome the state’s utilities generally try to avoid.

“We know this is different,’’ said Jorge Cardenas, a PSE&G vice president who has been with the utility for 36 years, referring to the recent extreme storms. “Our customers want us to do more.’’

The utility’s petition to spend billions of dollars on providing more resiliency to its system — the bulk of which would be spent raising equipment at substations or installing floodwalls to avert storm surges — has generated mixed reviews.

Many business groups and more than 100 municipalities back the investment, hoping it will reduce outages that occur during big storms.

Others, however, claim the utility is proposing a program that will impose new rate increases on electric customers in a state already saddled with some of the nation’s highest power prices.

The argument appears to have found some resonance with the BPU staff.

NJ Spotlight reported last month that the BPU wants to whittle down PSE&G’s proposal to spend $2.6 billion over the next five years to only $1 billion. The utility’s counteroffer is $1.9 billion, according to sources.

For the BPU, the issue represents a delicate balancing act. Even with New Jersey residents paying higher energy bills, the agency recognizes the need to harden the state’s gas and electric infrastructure — not only for PSE&G, but for the state’s other seven utilities. Most experienced outages during Hurricane Sandy, particularly in coastal areas.