Public Service Electric and Gas Company (PSE&G) has reached a $1.22 billion settlement with the New Jersey Board of Public Utilities (BPU) in PSE&G’s Energy Strong proposal to proactively protect and strengthen its electric and gas systems against severe weather conditions. The stipulation is under review by the other parties and participants in the case and will be submitted to the BPU for review and approval. The settlement culminates more than a year of public and evidentiary hearings before the BPU and negotiations with other parties in the case.
In February 2013, a PSE&G filing with the NJ BPU 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 10-year, $3.9 billion program.
If approved, PSE&G will invest $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; and $50 million to protect five natural gas metering stations and a liquefied natural gas station affected by Sandy or located in flood zones.
As part of the agreement, PSE&G will earn an authorized return on equity of 9.75 percent on the first $1 billion invested based on an accelerated recovery mechanism. PSE&G will seek to recover the remaining $220 million in a base rate case.
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.