Energy efficiency is the end game for Public Service Enterprise Group when it announced $14 billion to $17 billion in investments to improve the utility’s systems over the next five years — the most significant investment in the company’s 115 years, according to CEO Ralph Izzo.
The company plans a portion of that to be dedicated to clean energy infrastructure, including electric car recharge stations in more locations in the region.
“There is no doubt that higher reliability and cleaner energy is more expensive, so we have to offset that with energy efficiency,” he said.
But about half of the spending will go toward transmission projects — which are less about expansion and more about addressing aging infrastructure, Izzo said.
Some transmission stations are older than 80 years.
“Even as we have made significant investments in improving the gas, electric delivery and transmission systems, typical residential customer bills are about 21 percent lower than they were at the start of this decade,” Izzo said. “Lower natural gas prices and interest rates make this the ideal time to make these needed investments and still keep bills reasonable.”
The culmination of a variety of capital improvement projects will drive up utility bills for PSEG customers, since that is how the utility recovers its spend, but the focus on cheap natural gas plays a role in balancing out the other expenses.
Izzo said that, in a decade, customers will pay in a year what they paid in 2010 — in real terms.
“That, candidly, is not something that the customer will remember, and it’s not something the customer will applaud as they see their bill inch up, but it is a rational conversation one can have with a regulator,” Izzo said.
Which is why now is the time to pursue the improvements, as part of a decade of ongoing infrastructure investments.
Simultaneously, the company plans to change its energy mix to rely more heavily on gas by 2022.
In 2017, more than 60 percent of the 52,308 gigawatt hours produced by PSEG was nuclear, compared with 47 percent of 64,000 gigawatt hours projected for 2022. By comparison, gas in 2017 was 27 percent of production, compared to a projected 45 percent by 2022.
Those were among the topics discussed by Izzo and other PSEG officials at the annual investor day at the New York Stock Exchange last week.
PSEG announced the significant spending for improvement projects, which it will recover through an 8 to 10 percent increase in the annual rate base it charges customers, if approved by the New Jersey Board of Public Utilities.
As the average electricity customer is increasingly reliant on uninterrupted power supplies, and plugging in even more devices to the grid, the utility sees a need to spend tens of millions over the next five years.
But is all the work the utility is about to invest worth it, especially the scale of the projects all at once?
“It is a lot at one time if you were to say to me, ‘Would you have done this if gas prices didn’t drop by a factor of 5,’” Izzo said. “Of course, that would have been too much. If we hadn’t done what we did, the bill would have gone down by more than 20 percent, but if we hadn’t done what we did, when we did it, I don’t know that we would have ever been able to.”
The other question remains how much value customers will put on the improvements. And that will then drive decisions on even more improvement projects, Izzo said.
