The operator of the nation’s largest power grid yesterday moved to bolster the reliability of its system in southern New Jersey by designating three companies to handle the project.
PJM accepted a staff recommendation to split the project into three components, including one to be undertaken by PSE&G to do work at Artificial Island in Lower Alloways Creek where an affiliate operates three nuclear power plants.
The project decision has been closely anticipated by industry officials and energy analysts because it is the first transmission upgrade in PJM to be competitively bid out, instead of ordering the incumbent utility (in this case, Atlantic City Electric) to do the work.
At one point the PJM staff had recommended that PSE&G complete the entire project, but that decision waswhen it proposed Pepco Holdings, Inc. and LS Power undertake parts of the upgrade. If PSE&G had undertaken the entire project, the utility estimated the cost would have run between $280 million and $320 million.
The work assigned to PSE&G involves upgrading a Salem substation and installing other equipment -- at an estimated investment of between $100 million and $130 million, according to the company.
“We continue to believe that our project proposal was the best one from both a technical and cost perspective, and are therefore disappointed that ourThe motivation behind the PJM upgrades is to generate maximum power from all three Artificial Island nuclear units while maintaining the transmission system within limits during various contingencies and line outages, according to PJM. was not ultimately accepted,’’ said Karen Johnson, a PSE&G spokeswoman.
For energy companies, building new and upgrading existing transmission lines has become an increasingly lucrative part of their business plan, in part because they earn a higher return on their investment than when they maintain the poles and wires delivering power directly to homes and businesses.
That is especially true in PSE&G’s case. In the next five years, the Newark utility wants to invest up to $10 billion in such projects.
In deciding to split the project into three components, PJM staff suggested LS Power’s proposal to build a submarine power line under the Delaware River was the most environmentally friendly of the various proposed routes and would have the least trouble in securing the necessary permits.
PJM also rejected PSE&G’s proposal to build a 6-mile link through the Supawna National Wildlife Refuge and state wildlife management areas. The proposed route led the New Jersey Board of Public Utilities to question PJM about why staffas a preferred route.
Barring any unforeseen delays, the upgrades to the transmission system ought to be operational sometime in 2019, according to Paula DuPont Kidd, a spokeswoman for PJM. The reliability issues in the system stem, in part, from the isolated location of the three nuclear units in sparsely populated Salem County.