PSE&G Energy-Efficiency Plan Could Cut Electricity, Gas Prices for Customers

Tom Johnson | March 4, 2015 | Energy & Environment
Utility and state have reached tentative settlement that will enable consumers and businesses to use less power, reduce air pollution

energy efficiency
The state and Public Service Electric & Gas have agreed on a tentative settlement that would allow the state’s largest utility to embark on a new energy-efficiency program to reduce electric and gas costs to its customers.

While many details of the settlement remain to be worked out, it appears that the utility will be allowed to invest another $95 million in the program, according to Ralph LaRossa, president and chief operating officer of PSE&G, speaking at an investors’ conference in New York on Monday.

If approved by the BPU, the agreement could help the state reduce energy consumption by residents and businesses, which would reduce air pollution and the production of greenhouse-gas emissions that contribute to global climate change.

In its original filing with the state Board of Public Utilities, the utility sought to invest more than $100 million in the program, a continuation of past efforts to have customers use less electricity and gas. PSE&G has been the most aggressive among the state’s utilities in promoting energy-efficiency projects — at least in terms of spending.

The program, as proposed by PSE&G, would direct the utility’s efforts to reduce energy consumption to hospitals, multifamily dwellings, and governmental units, a program that has been praised in the past. It is unclear where the tentative settlement proposes to allocate the investments.

Still, approval of the proposal might signal that the state agency is moving toward changes that would spur PSE&G to invest more in energy efficiency — a goal of the New Jersey Energy Master Plan and one frequently mentioned by Ralph Izzo, chairman, president, and chief executive officer of Public Services Enterprise Group, the utility’s parent company.

At an analyst conference in New York, Izzo said discussions with BPU staff on the tentative settlement allows the utility to earn back lost revenue because customers are using less gas and electricity. He called it a “substantial breakthrough.’’

At an [link:|
NJ Spotlight roundtable in December], Izzo said: ‘’We need to make this a win-win-win for the consumer, for the environment and for the utility because otherwise it will not happen.’’

The issue is crucial because utilities fear that if they promote energy conservation too much, they will have not enough revenue to maintain the reliability of the electric and gas grids. Many environmentalists also support the changes in the hopes of promoting bigger efforts in energy efficiency — a change they believe could lead to less need for new power plants and high-voltage transmission lines.

New Jersey Director of the Division of Rate Counsel Stefanie Brand confirmed there is a tentative settlement, but noted there is nothing in the agreement that represents a radical new direction in how the utility recovers its costs from lost revenue.

In recent months, Izzo has repeatedly said the company wants to invest more money into energy efficiency, but only if its fixed costs of sustaining the reliability of its infrastructure remains..

Neither PSE&G executives nor Brand would elaborate on details of the tentative settlement.

Even as PSE&G pursues approval of its energy-efficiency program, the utility filed late last week a proposal to spend $1.6 billion over five years in upgrading its aging gas infrastructure.