PSE&G’s Next Big Ask: $2.5B to Upgrade Electric and Gas Distribution Networks

Tom Johnson | June 11, 2018 | Energy & Environment
Utility claims residential customers would see only small bumps in their monthly bills; money would go to boost resiliency, reliability, redundancy

Credit: PSE&G
pse&G snow
Public Service Electric & Gas is seeking approval to spend $2.5 billion over the next five years to replace and upgrade aging parts of its electric and gas distribution systems.

In a filing Friday to the state Board of Public Utilities, the state’s largest utility detailed its plans to strengthen parts of its system to better withstand storms and improve reliability while cutting restoration time for customers during outages.

The proposal, touted as an extension of an earlier $1.2 billion resiliency program approved by regulators in 2014, aligns with directives from state officials to utilities to make their systems more resilient and improve reliability.

Nevertheless, the filing is expected to come under intense scrutiny given increasing concerns over costs to be absorbed by ratepayers as New Jersey tries to transition more rapidly to a clean-energy economy. That move could boost utility bills — even with depressed natural gas prices.

PSE&G said the proposal, if approved, would lead to only modest increases in residential bills — about $4 per month for the typical electric customer, about $5 a month for the average gas customer.

Only last month, the BPU approved a $1.9 billion modernization program, allowing PSE&G to replace hundreds of miles of cast-iron mains and unprotected steel mains with more durable plastic. PSE&G also announced it would also seek to spend $2.5 billion on a new clean-energy initiative.

Meanwhile, Public Service Enterprise Group, the utility’s parent, won legislative approval for a program that could end up costing the state’s electric customers as much as $300 million a year to subsidize its three nuclear power plants in South Jersey.

PSE&G for the defense

Dave Daly, president and COO of PSE&G, defended the investment, saying the company has a proven record of making infrastructure improvements on time and on budget. “But there is much more work to be done to harden our electric and gas systems against severe weather and enhance reliability,’’ he said.

The proposed work would include raising electrical and gas equipment in flood-prone areas and modernizing aging electric and gas stations. In addition, the utility plans to install stronger poles and wires to reduce wind and tree damage, deploy advanced technology to hasten restoration, and build additional pipes to distribute natural gas to enhance reliability.

The last is sure to be controversial given the growing outcry across the state over the expansion of natural-gas infrastructure, which has more than a dozen new pipelines under consideration. Of $1 billion in planned expenditures for the gas system, $863 million is targeted to go to projects that add redundancy in eight, mostly northern, counties.

Daly argued building greater redundancy into the gas infrastructure will help ensure the utility can deliver fuel in winter despite supply curtailments that could impact the system.

Another $1.5 billion is projected to go to hardening the electrical system. The projects include $428 million to raise 14 substations and eliminate three stations in flood zones and $478 million to rebuild outdoor stations, many erected before 1956 and in need of replacement. Another $145 million is to be spent on smart-grid technologies to reduce the duration of outages.

“The next phase of Energy Strong will mean less frequent outages, faster restoration for customers who experience outages, better estimates for restoration times, improved customer safety, and improved worker safety,’’ Daly said.

If approved by regulators, work would begin in March 2019.