BPU Wants to Ease Regulatory Review to Spur Grid Upgrades

Consumer advocates question need for program, since many power and gas utilities are already committed to making infrastructure more resilient

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The state is looking to spur new investment by utilities into additional upgrades to their power grids by allowing the companies to move ahead with projects with minimal regulatory review.

The proposal, the subject of new discussions among utilities, regulatory staff, and consumer advocates, is somewhat similar to a mechanism that allows water utilities to invest in projects without the time and expense of traditional rate cases.

The proposal is concerning to consumer advocates and the state Division of Rate Counsel who say utilities have already shown a willingness to invest in infrastructure upgrades, a point underscored by the hundreds of millions of dollars spent in the wake of Hurricane Sandy and other storms to make their systems more resilient.

“I’m not clear on why we need this,’’ said Division of Rate Counsel director Stefanie Brand. “We have already put together programs to allow utilities to spend money without too much of a hit on ratepayers.’’

Ev Liebman, an associate director of AARP of New Jersey, agreed, saying there is no evidence the utilities are not investing now. “It is really a solution in search of a problem,’’ she said. “We’re giving the utilities a blank check.’’

Since Sandy and other storms, the New Jersey Board of Public Utilities has strongly encouraged utilities, particularly the gas and electric companies, to invest aggressively in making their systems more resilient in the wake of extreme storms, which most officials believe will be the new normal.

For the most part, virtually all have ramped up capital spending dramatically. Public Service Electric & Gas, for instance, won approval for a $1.2 billion program for upgrades to its electric and gas systems in 2014. The Newark utility also is spending hundreds of millions of dollars replacing aging cast iron gas mains with new safer and more durable plastic piping.

In recent years, the board has approved in excess of $3 billion in spending by energy and water utilities related to resiliency and reliability.

At first glance, PSE&G executives seem to like the latest proposal being developed by the BPU.

“It’s certainly a good first step,’’ said Joseph Accardo, deputy general counsel for PSE&G. “We obviously are going to want to see the details.’’

So far, there is only a four-page outline of what the so-called infrastructure program would involve. Under the proposal, infrastructure projects would extend for five years, a provision that utilities like because it brings more predictability to their programs and makes it easier to line up contractors to undertake the projects.

Projects that could be eligible for the infrastructure program would include replacement of cast iron mains, such as PSE&G is now doing, and electrical equipment, including devices that help make the power grid smarter.

The proposal stipulates that the maximum annual increase in rates attributable to an infrastructure program will be 2 percent. Brand said that provision might be acceptable if it only covers distribution rates — the cost of delivering gas or electricity — to the customer, but not if it involves the total rates paid.

“If it’s total rates, then it’s massive,’’ Brand said.

The BPU plans to hold its first stakeholder hearing on the proposal at a meeting on May 4 at its offices at 44 S. Clinton Ave., Trenton. Written comments can be submitted to the board on or before May 12, an indication that the agency is trying to move the process along quickly to draft and write a rule proposal and have it adopted before the end of the Christie administration next January.