PSE&G Wants to Spend $2.7B to Replace Aging Gas Infrastructure

Tom Johnson | July 28, 2017 | Energy & Environment
Five-year program would cost $540M annually, install 1,250 miles of new gas mains all told

Credit: PSE&G
pseg workers gas mains
Public Service Electric & Gas is seeking approval to expand its gas modernization program, asking the state to allow it to spend up to $2.7 billion over five years, or about $540 million annually.

In a filing with the New Jersey Board of Public Utilities, the state’s largest utility is hoping to accelerate the replacement of aging, cast-iron and unprotected steel pipes by installing 1,250 miles of new gas mains.

The proposal is part of an industry-wide effort to modernize gas pipelines, in some cases digging up mains installed more than a half-century ago. The investments come at a time when the cost does not sock ratepayers as much in their wallets because of historically low gas prices.

“We can get this done without a big pinch in customers’ pockets,’’ said Ralph LaRossa, president and chief operating officer of PSE&G.

State regulators also have backed the projects in the past, approving a series of investments by the gas utilities in recent years, including a $900 million, three-year program by PSE&G.

“A lot of utilities are doing this. It’s consistent with what is happening across the nation,’’ said Paul Patterson, an energy analyst with Glenrock Associates.

This past spring, PSE&G indicated it would seek approval for an expanded gas modernization program at an investors conference, saying it hoped to expedite the replacement of the aging pipelines.

“Today’s proposal would give us the ability to replace more aging gas pipes at an accelerated pace, ensuring we can continue to provide customers with safe, reliable natural-gas service now, and for many years to come,’’ LaRossa said.

PSE&G has just under 4,000 miles of cast-iron pipes, which is more than any other utility in the nation. Pipes installed before 1960 are the most prone to leak, a source of methane emissions, a potent greenhouse gas. These pipes make up 25 percent of the utility’s network, yet account for 65 percent of the leaks.

By replacing the aging cast-iron mains with new, more durable plastic pipes, the utility said the five-year program would be equivalent to taking 43,000 vehicles off the road.

The new filing also aligns itself with new policies being adopted by the BPU, which wants to make it easier for utilities to invest in five-year infrastructure programs, a proposal backed by labor, contractors, and suppliers. Consumer advocates, however, fear the changes could limit state oversight of the projects.

“Longer-term replacement programs like this one enable us to hire and train a stable workforce, knowing we will have sustained work for them,’’ said J. Fletcher Creamer Jr., chief executive officer of national contracting firm J. Fletcher Creamer & Son.

The utility said the program will ensure continued reliability and safety of its system, as well as create nearly 3,000 full-time jobs per year for the duration of the program.

Since January, PSE&G has stepped up the pace of its gas replacement program, installing 286 miles of pipes. The three-year program called for the replacement of 510 miles of gas mains.