PSE&G Reaches $1.22 Billion Settlement In Energy Strong Proceeding With NJ BPU Staff All 29 substations that flooded will be upgraded
NEWARK, N.J., May 1, 2014 /PRNewswire/ -- Public Service Electric and Gas Company (PSE&G) today announced that it has reached a $1.22 billion settlement in its Energy Strong proposal to proactively protect and strengthen its electric and gas systems against severe weather conditions. The stipulation, signed by the staff of the New Jersey Board of Public Utilities, is now being reviewed by the other parties and participants in the case and will be submitted to the BPU for review and approval.
In a filing with the New Jersey Board of Public Utilities in February 2013, PSE&G had sought approval to invest $2.6 billion during five years to harden its electric and gas systems, with the ability to seek approval to spend an additional $1.3 billion in the following five years to complete the proposed $3.9 billion,10-year program. The settlement reached today culminates more than a year of public and evidentiary hearings before the BPU and negotiations with the parties.
"We're pleased that we can move ahead and start building the resiliency into our systems needed to withstand the kind of severe weather that has devastated our state in recent years," said Ralph Izzo, PSEG chairman and CEO. "Clearly we are not able to make every improvement we planned, but this settlement will allow us to begin to make meaningful upgrades, including upgrading substations that were flooded in Superstorm Sandy and Hurricane Irene, replacing 250 miles of cast iron gas pipes and adding intelligence to our system to help speed restoration when there are outages. And as we make these improvements, we will work together to consider additional efforts to further harden our system.
"I want to acknowledge the efforts of all parties for their thoughtful review in reaching this agreement," Izzo said. "I also want to thank the thousands of government officials, business and labor leaders and members of the public who strongly supported our proposal during the past 14 months. We look forward to the Board's final approval so that we can get to work." The utility estimates that the work will create more than 2,000 jobs to bolster the state's economy.
If approved, the company will make the following investments:
- $620 million to raise, relocate or protect 29 switching and substations that were damaged by water in recent storms.
- $350 million to replace and modernize 250 miles of low-pressure cast iron gas mains in or near flood areas.
- $100 million to create redundancy in the system, reducing outages when damage occurs.
- $100 million to deploy smart grid technologies to better monitor system operations to increase our ability to more swiftly deploy repair teams.
- $50 million to protect five natural gas metering stations and a liquefied natural gas station affected by Sandy or located in flood zones.
Although the agreement generally contemplates a three-year program, the company has the option of completing the gas main work in two years, and it has also been agreed that completing the electric and gas station work may take up to five years. Under the agreement, PSE&G will earn an authorized return on equity of 9.75 percent on the first $1 billion of investment based on an accelerated recovery mechanism. The company will seek to recover the remaining $220 million in a base rate case to be filed no later than November 1, 2017.
The impact of the $1 billion investment on the typical residential combined electric/gas customer bill is expected to be approximately 2 percent in 2018 which will be more than offset by transitional charges stemming from deregulation that are expiring in the same timeframe.
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net-metering and demand response.
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Public Service Electric and Gas Company (PSE&G) is New Jersey's oldest and largest regulated gas and electric delivery utility, serving nearly three-quarters of the state's population. PSE&G is the winner of the ReliabilityOne Award for superior electric system reliability. PSE&G is a subsidiary of Public Service Enterprise Group Incorporated (PSEG) (NYSE: PEG), a diversified energy company (www.pseg.com).
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SOURCE Public Service Electric and Gas Company (PSE&G)