PSEG Chief Wants Customers to Use Less Energy, Without Taking Financial Hit

Izzo’s message: there are ‘billions’ to be made from energy efficiency, while industry and regulators squabble ‘over tens of millions’

Ralph Izzo, chairman, president and CEO of PSEG
New Jersey’s most prominent energy executive yesterday called for the state to revamp its regulatory system to make it easier for homeowners to use less energy and to have more access to energy-saving technologies — both with the support of and profit to utilities.

Ralph Izzo, the president and chief executive of Public Service Enterprise Group, mostly veered off from touting the benefits of nuclear power, a recurring preoccupation of the company in recent months, in a speech to the Chamber of Commerce of Southern New Jersey in Mount Laurel.

Instead, he called for broad changes to the utility business model that would let companies like PSEG shift investments away from big-ticket items like power plants to technology to help customers use less energy and have broader access to cleaner, renewable energy.

A familiar topic

The topic is a familiar one for Izzo over the past decade, especially for a company that has invested about $400 million in a series of energy-efficiency initiatives, but would like to ramp up those expenditures. It currently has a $93 million filing before the state Board of Public Utilities to do energy-savings projects at hospitals, schools, and multifamily units.

But Izzo expressed frustration at repeatedly going back to regulators for approval of projects that have proven to have broad support. “I marvel it didn’t sail right through,’’ he told reporters following the 20-minute talk to the business crowd, referring to the latest energy efficiency proposal. It was filed with the board in March.

“There are billions of dollars of energy efficiency (projects) we could be doing and we are squabbling over tens of millions of dollars,’’ Izzo said.

His call for regulatory reform comes at a time when the BPU is considering changes that would allow utilities to collect requested rate increases quicker and undertake upgrades to their infrastructure with less regulatory scrutiny, changes that have sparked protests from consumer advocates and larger companies.

It also occurs as the Legislature is considering taking up a bill that many view as crucial to promoting more energy efficiency in New Jersey, an approach already in use by 29 other states. Dubbed “decoupling,’’ it essentially ensures utilities get the revenue they need to maintain their infrastructure — their so-called fixed costs — no matter how much gas or electricity they sell.

Izzo did not offer any specific approach, but noted some gas utilities already are getting customers to reduce energy use. “There are many ways to do it,’’ he said.

Tackling decoupling

“We have to tackle decoupling if we want to turn those $70-$90 millions into hundreds of millions and billions of dollars and that’s where we are frustrated.’’

As part of his presentation, Izzo laid out the benefits if New Jersey could reduce energy use by 2 percent. It could put $130 million in the pocket of consumers; eliminate 1 million tons of carbon emissions; and be the equivalent of taking 200,000 cars off the road.

Clean-energy advocates and environmentalists share the frustration with the state’s policies in promoting energy efficiency, noting the state, once among the leaders in the nation in cutting energy use, has slipped to the middle of the pack, according to some rankings.

“While New Jersey has set aggressive goals for renewables, we have only taken baby steps in the area of energy efficiency,’’ Izzo said. “The utility, with its network and strong customer relations, can be the ultimate sales channel for new energy products and services.’’

In his talk to the chamber, Izzo also warned about the economic troubles faced by the company’s nuclear power plants, which he says may no longer be profitable within a few years. He advised that the company would retire those units if that proves to be the case, as it has already shuttered other power plants. The company is seeking undisclosed financial incentives to keep the units open.