Republican Gov. Chris Christie and Democratic State Senate President Steve Sweeney were among those taking part in a ceremonial groundbreaking Tuesday at PSE&G's Sewaren complex.
The switching station located on the property was knocked off when the storm hit in October 2012.
PSE&G has since spent about $125 million to upgrade and reinforce the station. The projects are part of its $1.2 billion infrastructure investment to protect and strengthen its electric and gas systems against severe weather.
The new 540 MW plant will replace the 65-year-old power plant and will be known as Sewaren 7.