Public Service Enterprise Group is once again ramping up its capital spending program.
In its annual investors conference, the Newark company announced that it is bumping up its capital investments from a previous commitment of $13 billion to $16 billion over the next five years.
This is significant because the increased spending creates benefits to the state’s economy and drives up profits for shareholders, because most of the investment is slated for its gas and electric utility, Public Service Electric & Gas. The utility accounts for 60 percent of the company’s overall earnings.
Between now and 2020, the utility plans to invest $11.9 billion in various capital initiatives, most of it on improvements and upgrades to its transmission and distribution systems. That investment also includes a $900 million program to modernize its aging gas pipelines and replace cast-iron mains with new, more-resilient pipelines.
In the wake of Hurricane Sandy, PSE&G and the other state gas and electric utilities are being pressed by regulators to improve the reliability of their delivery systems, particularly to cope with extreme storms.
PSE&G has won approval from the state Board of Public Utilities for major investments in both its electric- and gas-delivery systems. The utility already has invested $900 million of a projected $1.6 billion on its so-called Energy Strong program and received authorization for its gas-modernization program last year from regulators.
“We’re replacing and upgrading critical transmission lines, making our systems more resilient through our Energy Strong program and modernizing 510 miles of older gas mains,’’ said Ralph Izzo, chairman, president, and CEO of PSEG, the parent company.
[related]The increased investments are a boost to job creation, according to company executives. In prepared testimony to a legislative committee last month, Ralph LaRossa, president and COO of PSE&G, said the utility is generating 6,000 jobs over a decade with its investments in its transmission system, 500 more on its gas modernization program’ and about 2,000 with Energy Strong.
In at least one respect, the spending has paid off in terms of reliability. Nationwide, the typical electric customer loses power for about 1 hour and 45 minutes a year, according to PSE&G. For customers of the Newark, the average was less than 33 minutes in 2015. That includes all customers — even those who do not experience outages. When power goes out for PSE&G customers, the utility restores service within 56 minutes, officials said.
In addition to the utility, PSEG is spending another $2 billion on three new natural-gas power plants in Maryland, Connecticut, and at an existing site in Sewaren. The addition of the three power plants will bring subsidiary PSEG Power’s fleet of generating stations to a capacity of 13,000 megawatts. One megawatt is enough to power about 800 homes.
PSEG Power also plans to continue investing in large solar farms built by its subsidiary Solar Source. Through 2020, it plans to spend $140 million on new projects, identifying 20 potential landfills on which to locate the solar arrays. In the future, the company may seek approval of up to $200 million to $300 million in new projects through a multiyear filing, according to information presented to the analysts. Solar Source now has 16 utility-scale projects in 12 states (only one in New Jersey) with a capacity of approximately 277 megawatts.