In a deal that could benefit ratepayers, Jersey Central Power & Light has won approval from state regulators to sell off its half interest in the Yards Creek hydro-pump storage facility in Blairstown for $155 million.
In an order issued by the New Jersey Board of Public Utilities, the commissioners approved the sale of the 420-megawatt facility to a subsidiary of LS Power, Yards Creek LLC, an independent merchant-energy supplier. The latter acquired PSEG’s half-interest in the facility this past February and that deal closed in the third quarter, according to Marijke Shugrue, a spokeswoman for the company.
As part of the order, JCP&L agreed to apply $109.1 million of the proceeds from the sale to reduce deferred storm-recovery costs, which are typically recovered from ratepayers in future rate cases. Typically, the benefits from the sale of assets in utility cases are split between shareholders and ratepayers.
JCP&L, the second-largest electric utility in New Jersey with more than 1 million customers, has a deferred storm-recovery balance of approximately $305 million, according to the board’s order.
Divested rest of its power plants in 1999
The Yards Creek facility was the last remaining generating station owned by JCP&L, which divested the rest of its power plants when the state broke up the gas and electric monopolies in 1999. It began operation in 1965.
In recent years, with the price of wholesale electricity dropping dramatically, many energy companies are getting out of the generation business and focusing on growing regulated utility profits. FirstEnergy Corp., the owner of JCP&L, spun off its generation assets about two years ago after a subsidiary filed for bankruptcy.
Meanwhile, PSEG announced earlier this year it planned to sell off its fleet of fossil-fuel generating plants, although retaining its three nuclear power plants in South Jersey. The step was expected as the utility, Public Service Electric & Gas accounts for about 80% of its earnings now.