PSE&G to invest nearly $368MM in infrastructure upgrades, energy efficiency programs

Source: Public Service Electric and Gas Company

Public Service Electric and Gas Company (PSE&G) has received approval from the New Jersey Board of Public Utilities (BPU) to make additional investments in the company's electric and gas infrastructure, as well as in existing programs to help hospitals and other customers become more energy efficient. About $273 million will be spent to accelerate electric and gas projects between now and the end of 2012 to improve reliability and further stimulate New Jersey's economy. The utility will invest an additional $95 million in its successful energy efficiency programs.

Electric and gas investments

The BPU approved extensions to PSE&G's Gas and Electric Capital Economic Stimulus infrastructure Investment Programs for electric and gas distribution system upgrades. The projects will result in job creation and retention, and enable the company to provide safe, highly reliable electric and gas service to the utility's more than 2 million customers.

"In addition to strengthening our electric and gas distribution systems, these additional accelerated capital investments will improve the state's economy by stimulating the purchase of goods and services and by creating jobs," said Ralph LaRossa, PSE&G president and COO. "Whenever possible, the company will use local suppliers and contractors for the projects, in addition to our own skilled workforce. The combined projects are expected to generate more than 450 utility and contractor positions through 2012."

The utility will spend about $195 million in accelerated capital improvements to its electric distribution network that are expected to create more than 300 jobs. Among the projects are upgrades to voltage regulators, insulators, and breakers at substations; the replacement of underground cable facilities including transformers, network protectors and relays; upgrades to substation fire protection systems, and the replacement of overhead cable and other equipment.

The accelerated gas stimulus work includes eight projects representing an investment of approximately $78 million to enhance the reliability of the utility's gas distribution system. Among the projects are the replacement of 47 miles of aging cast iron and bare steel gas mains and 4,200 bare steel gas services. Additional projects include the replacement of aging or obsolete gas pressure regulators, meter and regulating equipment, and electronic measurement systems. The projects will create more than 150 positions.

These latest investments are in addition to about $700 million already invested by the utility since 2009 in accelerated infrastructure upgrades that resulted in 1,300 jobs new jobs created. PSE&G will recover the cost of the new programs through adjustments to electric and gas rates that would increase the typical residential customer's bill by less than 1 percent when taken together.

Energy efficiency programs

In other action, the BPU approved a request by PSE&G to invest an additional $95 million to bring energy efficiency measures to cash-strapped hospitals, municipalities, non-profits and multi-family housing units, including affordable housing and senior projects. The investment is an extension of a $166 million program approved in 2009 to provide energy audits and the direct installation of energy efficiency measures to customers who might not otherwise have been able to afford them.

This two-year program extension will provide additional investments in three program segments that are fully subscribed and have a backlog of customers who wish to participate.

Hospital Efficiency Program

New Jersey hospitals have been particularly hard hit by the economic turndown. The program's popular integrated approach to energy efficiency for this undercapitalized market sector has provided significant infrastructure improvements to urban hospitals. This extension will permit an additional $50 million investment targeted to in-patient medical facilities located in PSE&G's electric and/or gas service territory. A free Investment Grade Audit will determine potential savings derived from a variety of measures and technologies including the installation of lighting, HVAC, humidification, ventilation motors, energy management systems, and other energy consuming equipment. On average, hospitals will repay about 30 percent of the cost of improvements over three years, interest free, on their PSE&G bill.

Municipal/Local/State Government Direct Install Program

An investment of $25 million is available to government and non-profit facilities that receive electric and/or gas service from PSE&G. The program addresses a critical market segment consisting of numerous government and institutional facilities that are experiencing reduced revenues and struggling to hold down tax assessments. Government buildings, schools, universities and county colleges, community centers and regional authorities all are eligible. The program is targeted to buildings with annual peak demand use at or below 150 kilowatts. Customers receive an energy evaluation and report of recommended energy-savings improvements. Lighting upgrades are the primary improvement available under this program, with refrigeration, HVAC upgrades and other energy-saving measures considered where appropriate. PSE&G will initially pay the full installation costs for all recommended energy savings improvements with the customer repaying 20 percent of the total cost to PSE&G over two years, interest free, on their PSE&G bill.

Residential Multi-family Housing Program

About $20 million will be invested to address the needs of multi-family housing projects with five or more units. Eligible projects include New Jersey Housing and Mortgage Finance Agency (NJHMFA) financed projects and non-NJHMFA projects including garden, low, mid, and high-rise developments. Building owners receive an Investment Grade Audit at no cost. Cost-effective projects identified by the audit may include upgrades to lighting, HVAC, humidification, ventilation, windows and doors, motors and other energy consuming equipment. Measures with a simple payback of 15 years or less will be considered for retrofit or replacement opportunities. PSE&G will pay all upfront costs. On average, the customer will repay 30-35 percent of the installed equipment costs, interest free, through their PSE&G bill.
All auditing services for the programs are provided through qualified audit and engineering professionals employed by PSE&G and hired through a competitive bid process. The program participants will hire local contractors to install the approved equipment.

The BPU's decision will allow recovery of investment through an energy-based charge. The average residential electric customer will pay about 80 cents per year and the average residential heating customer will pay 92 cents per year in the first year of the program.

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