Executive Insight, Generation, Outage Management

PSE&G files rates electric grid improvements

Public Service Electric and Gas Co. (PSE&G) said the typical residential customer who receives both electric and gas from the utility is projected to pay about $12 less per year in 2018 than today if the utility gets approval for every project in its “Energy Strong” program to upgrade its electric and gas distribution systems.

The bill impact assumes that natural gas costs remain low and PSE&G supply costs are at current levels, according to the utility.

On February 20, PSE&G proposed investing $3.9 billion during the next 10 years to proactively protect and strengthen its electric and gas systems in the face of increasingly severe weather. Energy Strong would create about 5,800 jobs for electricians, mechanics, laborers, operating engineers and others, and opportunities for New Jersey businesses.

The utility has asked for initial funding approval of $2.6 billion during the first five years. Because some of the improvements will take more time to implement, the utility may seek approval to spend an additional $1.3 billion in the latter five years to complete the program.

In a filing with the New Jersey Board of Public Utilities, the utility detailed the proposed impacts on customers if the first part of the $3.9 billion investment is approved.

A typical PSE&G residential combined electric and gas customer is projected to see their annual bill drop about $12, or $1 per month in 2018. Bills will fluctuate slightly between now and then. In 2014, the average customer’s bill will be about 70 cents a month higher than 2013 and about $1.50 a month higher in 2015.

Bills will then begin to drop. In 2016 the average bill will be about $4.70 a month lower than 2013 and $2.90 a month lower in 2017 compared to 2013. The above bill impacts assume current PSE&G supply costs.

The utility estimates that in 2018, a typical annual residential electric bill will be about 3 percent lower than it was in 2008 and a typical gas bill will be about 33 percent lower — even with the proposed additional spending — and still well below the rate of inflation. 

Business customers also are projected to see lower overall bills in 2018 compared to current bills. For example, an industrial electric customer using 85 million kilowatt-hours per year, with a usage pattern similar to a class average primary voltage customer, is projected to pay about $1 million less in 2018 than today even if every project in Energy Strong was approved by the BPU. This bill also assumes current PSE&G supply costs.

The stability of bills is due to a number of factors. First, the price of natural gas has dropped nearly 40 percent in the past four years, lowering the cost of heat and electricity. Second, some charges currently included in customer bills will expire in 2014, 2016 and 2017. Two of those charges are related to the deregulation of the New Jersey energy market.

The Transitional Energy Facility Assessment will expire in January 2014 and the Securitization Transition Charge expires in 2016. A third charge, the Non-Utility Generation Charge, will approach zero in January 2017.

PSE&G is seeking BPU approval to begin the Energy Strong program on July 1, with initial rates effective Jan. 1, 2014.

PSE&G’s “Energy Strong” program would make improvements to its distribution system to reduce the number and duration of power outages caused by severe storms. The improvements 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.

Energy Strong has support from a diverse group of business, labor and municipal leaders.