New Jersey utility unveils $3.9 billion plan to strengthen electric and gas systems

NEWARK, N.J. — Public Service Electric and Gas Company (PSE&G) proposed to invest $3.9 billion during the next 10 years to proactively protect and strengthen its electric and gas systems against increasingly frequent severe weather conditions. In a filing with the New Jersey Board of Public Utilities, PSE&G asked for initial funding approval of $2.6 billion during the first five years. Since some of the improvements will take more than five years to implement, the utility may seek approval to spend an additional $1.3 billion in the following five years to complete the program.

PSE&G’s “Energy Strong” program would include protecting more than 40 utility installations from storm surges, strengthening distribution lines, making the electric grid smarter and thereby easier to restore customers, and modernizing the gas distribution system. The proposal would create 5,800 direct and indirect jobs and stimulate substantial economic activity for New Jersey businesses, all without impact on customers’ monthly bills.

“PSE&G has been recognized repeatedly for providing safe, highly reliable service,” said Ralph Izzo, PSEG chairman and CEO. “But reliability is no longer enough; we must also focus on the resiliency of our systems to withstand natural disasters.

“It’s clear that Sandy, Hurricane Irene and the October ice storm in 2011 represent extreme weather patterns that have become commonplace,” Izzo said. “It’s equally clear that how we live and do business is so dependent on energy that any outage is hard to tolerate. Sandy was a defining event for all of us; the state’s entire energy infrastructure needs to be rethought in light of weather conditions that many predict will continue to occur.”

“PSE&G is responding to Sandy with a program that looks to the future with investments that would better protect homes and businesses when the next storm hits, while also improving day-to-day reliability, ” added Ralph LaRossa, PSE&G president and COO.

During Sandy, 2 million of PSE&G’s 2.2 million electric customers lost power due to damaged switching and substations, damaged poles and electrical equipment, and downed trees that brought down wires. With the protections outlined in the filing in place, about 800,000 of those affected by a storm like Sandy would have remained with power and restoration times for the rest would be reduced.

A new report from the American Society of Civil Engineers (ASCE) warns that the failure to make adequate infrastructure investments in the U.S. electric grid could significantly affect business productivity, employment and competitiveness. ASCE finds that by 2020, closing the investment gap in our electrical grid would save American businesses $126 billion, prevent the loss of 529,000 jobs, and avert $656 billion in personal income losses.

“The cost of inaction is too high,” Izzo said. “We have a choice: continue to make incremental improvements and repairs to our electric and gas systems as we have always done. Or, we can be truly forward-looking and make more substantial investments that will help our state be better prepared for the next Irene, Sandy or other catastrophic event.”

Impact on customer bills
Pointing to lower gas bills and stable electric bills, the utility said making these added investments now will have little overall impact on residential or business customer bills. The price of natural gas has dropped nearly 40 percent in the past three years, which has lowered the cost of heat and electricity. In 2014 and 2016, certain transitional charges related to deregulated supply markets will roll off customer bills.

“This is the right time to make these investments. With significantly lower gas prices and retiring some transitional charges, we can essentially make these critical investments without raising bills,” LaRossa said. The utility estimates that in 2018, a typical annual residential electric bill will be approximately 5 percent lower than it was in 2008 and a typical gas bill will be approximately 35 percent lower — even with the proposed additional spending — and still well below the rate of inflation.

LaRossa said a number of labor leaders, mayors and chambers of commerce have already expressed support for the utility’s proposal, which will create 5,800 new jobs in construction, engineering and support services. “They believe these are important investments for New Jersey,” he said. “We look forward to discussing our plans in more detail with regulators and other state officials on the best way to proceed to protect New Jersey’s quality of life and economic competitiveness.”

Key plan provisions
• $1.7 billion to raise, relocate or protect all switching and substations affected by recent storms as well as those in newly designated flood zones.
• $1.04 billion to replace and modernize 750 miles of low-pressure cast iron gas mains in or near flood areas.
• $454 million to deploy smart grid technologies to better monitor system operations to increase our ability to more swiftly deploy repair teams.
• $215 million to improve pole distribution systems.
• $200 million to create redundancy in the system, reducing outages when damage occurs.
• $60 million to move 20 miles of overhead electric distribution lines underground.
• $140 million to protect nine natural gas metering stations and a liquefied natural gas station affected by Sandy or located in flood zones.

“We strongly believe that making these investments in protecting our energy infrastructure against future superstorms, while keeping customer bills well below the Consumer Price Index from 2008 to 2018, is a significant win for customers and New Jersey’s economy,” Izzo said.