Public Service Enterprise Group Inc., owner of New Jersey’s largest utility, plans to spend $3.9 billion during the next decade to protect its power and gas network from natural disasters.
Public Service Electric and Gas Co. asked regulators to approve $2.6 billion during the next five years to flood-proof substations, replace century-old gas pipes and add “smart” sensors to utility poles, Chairman and Chief executive officer Ralph Izzo told reporters today. It may seek an additional $1.3 billion for the following five years to complete the program, according to a statement today.
“We view this as a major investment in our customers and in New Jersey,” Izzo said. “The cost of inaction is just too high for New Jersey businesses and families to bear.”
Public Service, which provides power to 2.2 million New Jersey homes and businesses, is the latest northeast U.S. utility to bolster electric networks against flooding and high winds in the aftermath of Superstorm Sandy. The worst-ever U.S. storm knocked out power to more than 8.5 million homes and businesses, causing more than $80 billion in economic damage as it toppled power lines across 17 states.
The widespread blackouts caused by Sandy and other recent storms have heightened focus on vulnerabilities to the U.S. grid, Sam Brothwell, senior utilities analyst with Bloomberg Industries, said in an e-mail.
“The entire capital stock, from power plant to pole, is getting older and reinvestment is not keeping up,” Brothwell said. “The storms are a wake-up call to the fact that utility assets don’t last forever.”
The lights would have remained on for 800,000 of the 2 million customers left in the dark by Sandy if Public Services’ planned upgrades had already been in place last year, the Newark, New Jersey-based company said in the statement.
The tempest’s 90 mile-per-hour winds (145 kilometers-per - hour) and 14-foot (4.3-meter) storm surge interrupted power to one-third of Public Service’s transmission circuits, damaging 2,400 utility poles and 48,000 trees in its service territory.
Public Service plans to spend $1.7 billion to raise or relocate switching and substations that lie in newly designated flood zones. Other planned investments include $1.04 billion to replace 750 miles of gas pipelines, $454 million for smart-grid technologies and $215 million for reinforced poles, according to the statement.
Public Service will pay for the new spending with savings derived from natural gas prices driven lower by shale drilling rather than charge customers more for the improvements. The power company would reconsider its funding plans if commodity prices rise sharply, Izzo said.
Northeast Utilities, owner of Connecticut’s largest utility, plans to spend about $300 million this year to make its power system more resilient to storms, Chief Operating Officer Leon Oliver said today on an earnings call with investors. The spending has been approved by Connecticut regulators, he said.
Consolidated Edison Inc., owner of the utility providing power to New York City, asked state regulators Jan. 25 for a rate increase to help fund $1 billion in Sandy-related spending. The planned investments include protecting 13 substations against flooding, burying more lines and waterproofing underground and substation equipment.
Public Service fell 0.4 percent to $31.29 at the close in New York.