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February 26, 2013

PSE&G Unveils $4 Billion, 10-Year Proposal to Make New Jersey 'Energy Strong'



In Seaside Heights, New Jersey, a town that was largely submerged during Hurricane Sandy— during which its Carousel Arcade was infamously torn from its moorings and washed out to sea— rebuilding continues, but many homes and stores remain dark at night.

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Plans to restore the infrastructure at the Jersey Shore, and throughout the hard-hit state, now are being proposed—including tougher, more storm-resistant electric and gas distribution systems.

In New Jersey last week, the Public Service Electric and Gas Company (PSE&G) introduced a plan 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:

  • $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 and to more rapidly 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; and
  • $140 million to protect nine natural gas metering stations and a liquefied natural gas station affected by Sandy or located in flood zones.

PSE&G chairman and CEO Ralph Izzo commented, “Reliability is no longer enough; we must also focus on the resiliency of our systems to withstand natural disasters. 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.”

During Sandy, two 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 Reston, Virginia-based 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.

They are preaching to the converted: Indeed, according to Austin, Texas-based research and consulting firm, Zpryme, the market for an essential component of an advanced smart grid— distribution management systems (DMS)—will reach $5.6 billion by 2020, driven by companies such as GE, Alstom Grid, Siemens (News - Alert) and Telvent,

 “The cost of inaction is too high,” Izzo said. “We have a choice:  [We can] 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.”       Little Impact on Customer BillsPointing 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,” said Ralph LaRossa, PSE&G president and COO.

 The utility estimates that in 2018, a typical annual residential electric bill will be approximately five 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.”




Edited by Brooke Neuman
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