PJM Scales Back PSE&G Proposal to Build High-Voltage Transmission Line

Power grid operator adds two energy companies to original project, first time PJM bids out transmission upgrade

Plans by Public Service Electric & Gas to build an 18-mile high-voltage transmission line from its nuclear power plants in Salem County apparently have been greatly scaled back, according to a recommendation by the staff of the nation’s largest power grid.

The project, originally endorsed by the staff of PJM Interconnection last year, will now involve two other energy companies and relegate PSE&G — if accepted by the PJM board — to work mostly centered on the three units on Artificial Island where the power plants are located.

The power grid operator wants the project to move forward to address reliability of its system in the region. It is significant because it is the first transmission upgrade in PJM to be competitively bid out, instead of ordering the incumbent utility (in this case, Atlantic City Electric) to undertake the project. ACE’s parent company, Pepco Holdings Inc., won a small piece of the project.

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PSE&G is aggressively seeking to invest in new transmission lines or upgrade existing ones, in part, because the Federal Energy Regulatory Commission usually grants a higher rate of return on these investments than for the poles and wires that deliver electricity to homes and businesses over its distribution system. In the next five years, the Newark utility wants to invest up to $10 billion in such projects.

PSE&G filed an application with PJM to spend between $280 million and $320 million to do the necessary upgrades suggested by the grid operator, a proposal originally endorsed by its staff, but one that generated an outcry from others who were competing to win the bid. It led PJM to reopen the process, resulting in the decision of its staff to split the project among PSE&G, LS Power, and PHI.

The biggest winner appears to be LS Power, which will handle one of the most environmentally sensitive parts of the project, building a submarine power line across the Delaware River to deliver power from the nuclear units to neighboring states, including Delaware.

[related]“The way they are proposing to go under the river is more environmentally friendly and easier to secure permits,’’ said Paula DuPont Kidd, a spokeswoman for PJM. She said the whole issue of getting across the river was to do it in the least intrusive way.

The recommendation also apparently rules out building high-voltage lines under PSE&G’s proposal that would cross through the Supawana Meadows National Wildlife Refuge and state wildlife management areas, a route that probably would have led to contentious delays in permits being granted. LS Power has proposed a new, diverse route, according to the staff.

Environmental groups have been increasingly critical of utility projects that traverse public lands that have been set aside with taxpayers’ dollars, not only from electric power lines, but also from expansion of natural gas pipelines. The proposed route also drew concern from officials of the state Board of Public Utilities.

It is unclear how much each company will end up in investing in the project. Neither PJM nor PSE&G could provide detailed estimates. According to a slide presentation by PJM, the Newark utility would invest in at least $63 million in the required upgrades, mostly involving building a new substation and upgrades to an existing substation near the plants.

The PJM staff said the LS Power and PSE&G proposals were regarded as the most cost-effective projects before the agency, eliminating from consideration two other submittals from rival companies that were under consideration.

In a statement, Karen Johnson, a spokeswoman for PSE&G, said the utility continues to believe that its proposed solution is “the best way to reinforce this part of the transmission grid from an effectiveness, cost efficiency, and accountability perspective.’’

The staff’s recommendation still needs to be approved by the PJM board, which means there will be a lot of lobbying for changes in the proposal. PSE&G continues to have a filing before FERC, saying PJM changed the rules of the process in the middle of the agency’s determination.