PSEG Power is shedding another generation asset, continuing a trend in which its parent, Public Service Enterprise Group, is moving to make the most profit from its regulated utility.
In the company’s quarterly earnings call, PSEG executives disclosed it has entered into an agreement to sell its half-interest in the Yards Creek hydro-pump storage facility in Blairstown and what was once Pahaquarry in Warren County. FirstEnergy Corp. owns the other 50% of the facility.
The 420-megawatt facility, opened in 1965, is expected to be sold to Yards Creek Energy, LLC, a subsidiary of LS Power, an independent merchant-energy supplier. Terms of the deal, expected to close in the second half of 2020, were not disclosed.
“This sale reflects our ongoing commitment to optimize the generation plants,’’ Ralph Izzo, chairman, president and CEO of PSEG, told analysts in the earnings call on Wednesday.
Making plans for PSE&G
The sale is hardly surprising as PSEG has long signaled it intends for its utility, Public Service Electric & Gas, to drive earnings for the Newark company. This year, PSEG is projected to earn 80% of its profits from PSE&G, and 90% of its capital spending over the next five years will be directed there.
Last June, the company sold off two of its coal plants in western Pennsylvania, leaving the generating subsidiary with only one remaining coal unit in Connecticut. That facility is due to be retired in 2021.
“PSEG’s long-term strategy to transition our business to a mostly regulated company with predictable cash flows is on track,’’ Izzo said.
Perhaps more meaningfully, it appears that the utility’s filings are meant to align with the Murphy administration’s clean-energy goals. These seem to be moving forward, after being on hold for many months before the New Jersey Board of Public Utilities.
PSE&G has proposed nearly $3.5 billion worth of initiatives for the regulatory agency to consider. They include $2.5 billion in energy efficiency programs, $500 million to $600 million for advanced metering infrastructure, $100 million for energy storage and $100 million for charging stations for electric vehicles.
Each of the initiatives has been identified as a priority in the state’s new Energy Master Plan and would be spread out over the next six years, according to the filings. The BPU has issued draft procedural schedules to take up the filings this year. Izzo said he hoped approvals could come by the first quarter of 2021, or even late this year, if negotiated settlements can be reached.