PSE&G Proposes $4B for Grid Resiliency

High-tech, low-tech and energy efficiency are all on the plate as PSE&G rebuilds after Sandy.

When Hurricane Sandy hit New Jersey in late October, Public Service Gas & Electric, one of the state’s largest utilities, had 1.7 million customers without power and saw about $300 million in damage to just the utility, which does not include any costs for the power plants that supply PSG&E.

“Business as usual is not enough,” Ralph Izzo, CEO of PSE&G, said at the Agrion Energy & Sustainability Summit in New York City. Izzo announced that the utility does not just want to rebuild for reliability, but for future resiliency given the increase in intense storms. Not only is Izzo thinking about rebuilding in a new way, but also about how business will change for utilities down the road.

“People depend on electricity in a way they didn’t when we designed the system,” he said during his keynote. Demand is growing at slower rates, but reliable power is more important than ever. As an example, he noted that PSE&G’s website received more than one million page impressions when Sandy hit.

PSE&G will propose a package of $4 billion upgrades to the New Jersey board of public utilities on Wednesday called Energy Strong Infrastructure. Some of that money will go to raising at-risk infrastructure to be more flood-resistant, but it will also go to protect critical facilities and deploy smart grid across the distribution network.

Had these investments already been in place before Sandy, Izzo said that outages would have been cut in half and restorations would have gone faster for those that did lose power. If $4 billion seems like a substantial price tag, the even more surprising figure is that the investment is designed without any rate increase.

There is a confluence of factors that allow for such a large investment to happen without raising rates. Izzo noted that natural gas is abundant and cheap, interest rates are low and labor is readily available. Instead of rates maybe going down for customers, instead PSE&G can use that money to strengthen the grid. “We obviously need to address roots of the problem,” Izzo said of making grid upgrades.

Along with the infrastructure proposal, PSE&G is also looking to invest an additional $300 million in energy efficiency, beyond what the utility already invests in its energy efficiency programs. To harvest all the low-hanging fruit of energy efficiency, PSE&G has turned to regulators for reform to make energy efficiency a core investment, just as a circuit breaker or meter would be. “There’s nothing cleaner than a power plant that doesn’t need to run,” said Izzo. “Until every window is caulked, smart meters will remain a hard sell.”