Public Service Electric & Gas yesterday said it has reached a settlement in principle with state officials to spend $905 million to expedite the replacement of aging gas pipes.
The agreement is less than the $1.6 billion the Newark utility sought when it made its original filing this past March; still, it is enough to replace 510 miles of cast-iron and unprotected-steel gas mains and 38,000 service lines to homes and businesses over a three-year period.
The mains and service lines will be replaced with strong, durable plastic piping, which is much less likely to leak and release methane, a potent greenhouse gas.
The replacement of aging pipelines has become a top priority of the New Jersey Board of Public Utilities and the state’s utilities — especially in the wake of extreme storms like Hurricane Sandy, which caused severe damage to some gas infrastructure.
Beyond the staff of the BPU, the settlement also was reached with the Division of Rate Counsel, which represents consumer and business interests in regulatory matters. The settlement still requires a stipulation to be signed by the parties, which then must be approved by the BPU commissioners.
The utility’s customers will not see any increase in their bills until 2017. Initially, typical residential customers will pay 49 cents more a month on their bills. At the end of the three-year program, the cumulative increase will amount to $4.82 on a monthly bill, or a surcharge of 1.5 percent.
[related]New elevated pressure systems also enable the installation of excess flow valves that automatically shut off gas flow if a service is damaged, and better support high-efficiency appliances, according to PSE&G.
The agreement was reached after six months of discussion between the utility and regulatory officials. Although the proposal calls for a three-year program, it gives the utility the ability to make a similar level of annual investment. In its filing, the utility had sought to replace 800 miles of gas mains.
“We look forward to continuing these substantial upgrades to our system,’’ said Ralph LaRosssa, president and COO of PSE&G. The increased investment in its infrastructure comes at a time of declining prices for natural gas. Since 2009, residential gas-heating bills are down 47 percent because of cheaper supplies of the fuel.
Previously, the BPU approved more than $300 million of new investment in the gas system by PSE&G as part of its $1.2 billion Energy Strong program, most of which is geared to make its electrical infrastructure more resilient.