PSE&G to accept curtailed energy-efficiency plan, still will cost close to $1B

The utility initially proposed $2.5B investment in efforts to get customers to use less electricity and gas
Credit: (AP Photo/Gerry Broome)
File photo: A utility worker holds a smart meter prior to installation on a house. A separate PSE&G proposal for $800 million to create an advance technology network to include smart meters for homes is still before the BPU.

Public Service Electric & Gas has reached a tentative settlement with state regulators over its proposed $2.5 billion plan to invest in energy-efficiency programs for its customers, accepting a scaled-back $970 million program instead.

The stipulated settlement, signed by the utility, the staff of the Board of Public Utilities, and New Jersey Division of Rate Counsel, is expected to be approved Wednesday at the BPU’s bimonthly meeting. Besides reducing the utility’s proposed investment, the programs will run only three years instead of six years.

Energy efficiency — getting utility customers to use less electricity and gas — is widely viewed as one of the foundations of the Murphy administration’s clean-energy agenda. PSE&G’s proposal, if approved, could establish a framework for how regulators view proposals by other utilities, which are due to be submitted to the BPU on Friday.

In the settlement, PSE&G’s proposal to invest in 22 energy-efficiency programs was whittled down to 10 mostly involving core programs it has developed over the past decade. Those will consist of four residential programs; five commercial and industrial programs; and one multifamily program.

“We wanted to focus on programs that the utilities are going to administer,’’ said Rate Counsel director Stefanie Brand. Under a two-year-old law, utilities are responsible for reducing customers’ use each year by 2% and 0.75%, for electric and gas respectively.

“It’s still going to be a substantial investment,’’ Brand said.

Utility doesn’t get its way

The settlement rejected a request by PSE&G to be the exclusive agent for regulated energy-efficiency projects within its territory, a proposal panned by critics who argued a competitive private market already exists that could offer customers more and cheaper choices in how to reduce use.

The company also did not win approval for a new mechanism to allow it to recoup any lost revenue from its energy-efficiency programs, according to Brand. Instead, PSE&G will adopt a system used by two gas utilities in New Jersey to recover revenue lost when consumers are not paying them as much for power, but not for weather-related losses.

PSE&G declined to comment on the tentative settlement.

Previously, the company said its investments in energy efficiency would save customers billions of dollars on their energy bills, reduce emissions, and create thousands of jobs over the next two decades. Amid the coronavirus pandemic, many clean-energy advocates have urged the state to ramp up efforts to reduce energy use as a quick way to help New Jersey recover from job losses created by COVID-19.

The tentative stipulation was also signed by the New Jersey Sierra Club. “We’d like to see more money going out to energy efficiency,’’ said Jeff Tittel, the club’s director.

Originally, the energy-efficiency proposal was part of a $4 billion program PSE&G filed to help the state achieve a clean-energy future. Besides $2.5 billion for energy efficiency, the package included proposals to spend $261 million to promote electric vehicles; $109 million for battery storage; and $800 million to create an advance technology network to include smart meters for homes.

Those proposals are still before the BPU and, like the other utilities’ energy-efficiency programs, are anticipated to be considered by the agency over the next couple of years. All are designed to align with Gov. Phil Murphy’s clean-energy agenda, which calls for New Jersey to rely on 100% clean energy by 2050.

With customers facing new increases in bills resulting from the Murphy administration’s efforts to ramp up development of both offshore wind projects and a new program to promote solar energy, costs appear to be an increasing concern of regulators.

“This isn’t the time to raise everybody’s rates because so many people are in dire straits,’’ Brand said. “You can’t ignore the pandemic.’’