SEC Filing: PSEG Yet to Decide About Equity Stake in Offshore-Wind Project

The BPU is reviewing applications for approval of plans to build an initial cluster of wind farms, to generate as much as 1.1 gigawatts of electricity

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Offshore wind
Public Service Enterprise Group appears to be keeping its options open on how much it will invest in the state’s ambitious efforts to be a leader in the offshore-wind industry that’s developing up and down the Eastern Seaboard.

In a filing with the Securities and Exchange Commission yesterday, the Newark company said it would decide by the second half of this year whether it would exercise an option to acquire an equity interest in Ocean Wind, one of three projects bidding for state approval to build up to 1,100 megawatts of offshore wind off the Jersey coast.

PSEG already has entered into an energy-management agreement with Ocean Wind LLC, a wholly owned subsidiary of Ørsted US Offshore Wind.

The New Jersey Board of Public Utilities is currently reviewing the applications and expects to decide by July what projects will be selected to build the state’s initial cluster of offshore-wind farms. Besides Ørsted, the other developers include Equinor, which has a project off of Sandy Hook, and EDF Renewables, pushing an offshore-wind farm off of Atlantic County.

The BPU has given the developers the flexibility to build between 400 MW and all 1,100 MW of the power to be generated. Ørsted has indicated a preference for building all 1,100 MW, citing the benefits of economy of scale in driving down the overall cost. None of the applications, however, have been made public because the BPU says they contain proprietary information.

The energy management services presumably involve PSEG helping Ørsted connect the offshore-wind farm, located about 15 miles off Atlantic City, to the land. PSEG has a potential lease of land for use in the project development, according to the filing.

Many irons in the fire

The Murphy administration is banking on building 3,500 MW of wind capacity off the coast by 2030, a key component of its overall goal of having 100 percent of New Jersey’s power needs delivered by clean energy by 2050.

Public Service Electric & Gas, a subsidiary of PSEG, has been the most aggressive utility in New Jersey in seeking to align itself with Murphy’s clean-energy goals. It has a $2.5 billion energy efficiency filing now being reviewed by the BPU.

Other PSE&G filings yet to be looked at by the agency are to install smart meters in homes ($900 million); to build out the infrastructure for electric vehicles ($364 million); and for energy storage ($130 million). The utility also is seeking $2.5 billion to strengthen its gas and electric grids.

PSEG has been more circumspect about its intentions on offshore wind, likely to be the most expensive of the state’s clean-energy ventures, leading to billions of dollars of investments, much of it subsidized by utility customers.

Ralph Izzo, PSEG's president, CEO, and chairman
In its quarterly earnings call, PSEG CEO Ralph Izzo was asked about how deeply the company might get involved in building the transmission necessary to bring power from offshore to where it is needed. Initially, the BPU is looking at bids that include transmission costs, Izzo noted, but the agency might separate supply from transmissions in future solicitations.

While discounting any intention to build the wind farms, he said the utility has the ability to help the project with power transmission. “So we would have some flexibility to help with their transmission needs,’’ he said.

CEO also talks about nuke plants

On the call, Izzo also was asked about the BPU’s decision two weeks ago to award up to $300 million subsidies to the three nuclear units in South Jersey operated by PSEG Power, another subsidiary. Izzo had repeatedly threatened to close plants because of economic challenges if they did not receive financial incentives.

He congratulated the commissioners for their decision — on which they were clearly conflicted — arguing they had avoided $400 million in higher bills, increases in greenhouse gas emissions, and thousands of lost jobs.

“So I think that was an incredibly courageous but right decision for the state of New Jersey,’’ Izzo said.

For the first quarter, PSEG did well, beating the consensus estimates of analysts by coming in with operating earnings of $1.08 per share, about 8 cents above projections. Higher transmission and distribution rates accounted for a good part of the increase.