PSE&G Wants to Spend Almost $900M on Resiliency of Natural-Gas Network

Critics argue most of the backup pipelines will never be needed, question utility’s decision to invest in infrastructure based on problems not likely ever to occur

Credit: NJ Spotlight News
Gas pipeline
Public Service Electric & Gas plans to add 14 gas pipelines to its grid to safeguard against curtailments in interstate shipments of natural gas, but critics say the lines will be seldom, if ever, used.

In filings on the Newark utility’s pending $2.5 billion Energy Strong II program, the Division of Rate Counsel argued the overall project should be rejected, saying it will have significant impacts on rates if approved as proposed.

But Rate Counsel director Stefanie Brand and her consultants addressed their most withering criticism to the company’s nearly $1 billion plan to strengthen the resiliency of its gas distribution system, the bulk of which ($863 million) will spent on projects designed to back up supply if interstate pipelines are disrupted.

“We just don’t think we need to do this,’’ Brand said. “The contingency that they are trying to protect against has never happened. It just doesn’t feel like a wise investment for the state or ratepayer.’’

The Energy Strong proposal comes at a time when the state Board of Public Utilities is juggling various petitions that would increase utility bills by more than $12 billion, according to consumer advocates. The projects range from ratepayer subsidies for nuclear power plants, to clean energy, to requests from other utilities to upgrade their electric and gas systems.

Reducing outages, speeding recoveries

PSE&G argued the investments to upgrade its gas and electric system align with state regulators’ push to prevent widespread outages and reduce restoration times when they do occur.

“More volatile weather and our customers’ increased reliance on energy are having a significant effect on how we deliver electricity and gas to our customers,’’ the utility said.

“PSE&G’s focus is to invest intelligently and in ways that maximize the benefits to our customer,’’ said Karen Johnson, a spokeswoman for the utility.

“Recent events have heightened awareness of the risk of interstate gas curtailments,’’ said Wade Miller, director of gas transmission and distribution engineering for PSE&G, in the utility’s filing. He recounted the case in April 2016 when a Texas Eastern interstate pipeline ruptured, disrupting the flow of gas in the system by 78 percent over 11 days and by 39 percent over five-and-a-half months.

If such a curtailment happened in midwinter, Miller projected that between 250,000 and 400,000 of the utility’s 1.8 million gas customers would have had service interrupted.

The Rate Counsel’s consultants argued otherwise, saying PSE&G’s curtailment-resiliency program is based on an unrealistic assumption of zero gas supplies from a major interstate pipeline in the event of a disruption.

But gas flow in today’s interstate pipelines is no longer in a single direction end to end, so interruptions in one portion of a line can be compensated for by changing the direction of the flow in other portions, according to Edward McGee, an associate with Acadian Consulting Group.

“The fourteen pipeline extensions proposed by the company would be likely be seldom used — if ever. In fact, there is a chance some of the proposed pipeline extensions would become ‘stranded’ assets since they would not be used for the resiliency purposes for which they are justified,’’ McGee argued.

Of the 14 pipeline extensions, McGee projected one-third would only be required once or twice over the next decade; another third would only be used once or twice over the next two to three decades; and the final third would never be required.

The pipeline extensions, occurring as far south as Hamilton in Mercer County and as far north as Mahwah in Bergen County, would mostly be deployed in small increments, ranging from as little 0.7 miles to 11.5 miles. All told, the extensions would total about 48 miles, if approved.

Also on PSE&G’s shopping list

Besides the pipeline extensions, the PSE&G proposal includes an LNG (liquified natural gas) storage facility in either Edison or Woodbridge that would inject natural gas into the utility’s system in case of impending curtailments. McGee also said the facility would see very little or no use in most years.

“It is not sound business practice to invest significant amounts of capital to protect against an unknown likelihood,’’ he concluded.

In New Jersey, the ongoing expansion of natural-gas infrastructure is an increasingly divisive issue. Cheap supplies from the Marcellus Shale region have lowered costs to consumers and helped revive the state’s manufacturing sector, according to the Division of Rate Counsel.

With up to nine gas pipeline projects pending, as well as four new gas-fired power plants, many environmentalists are calling for a moratorium on new proposals. They argue the state will never achieve its clean-energy goals to reduce global-warming emissions if New Jersey continues to rely on natural gas.

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