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Plugged in to utility's planning needs PSE&G executive has eye on far-reaching transmission upgrades

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An engineer by training, Kim Hanemann likens her current role to being ‘a startup in an existing organization.’ She oversees a $1.5 billion capital budget as she plans improvements to PSE&G’s delivery infrastructure.
An engineer by training, Kim Hanemann likens her current role to being ‘a startup in an existing organization.’ She oversees a $1.5 billion capital budget as she plans improvements to PSE&G’s delivery infrastructure. - ()

An engineer by craft, PSE&G’s Kim Hanemann is not content to design plans from the comfort of a desk. She insists on seeing results in the field.

“It’s one thing to draw something on a piece of paper,” Hanemann said. “It’s another to build it. When you understand both sides, you better understand the obstacles.”

Hanemann has plenty exposure to both sides at her role as the utility’s executive vice president of delivery projects and construction, a position she has held since December 2010 — and one that could become more critical as the utility makes the case for a far-reaching upgrade that would cost nearly $4 billion.

The job’s responsibilities have grown since the division was created in 2007 to better manage transmission upgrades mandated by the regional grid operator, PJM Interconnection. As PJM requires more from utilities, Hanemann said, the company needed to grow accordingly. Her division was formed to handle project management, an experience Hanemann likens to being “a startup in an existing organization.”

Hanemann oversees an annual $1.5 billion capital budget, up from $270 million in 2009, and about 420 employees, including project engineers and construction workers. That compares with staff of about 40 when the division was formed. The division now oversees about 400 projects a year.

And those projects are critical to system reliability, said Ralph LaRossa, PSE&G’s president and chief operating officer, who has worked with Hanemann since she joined the company as an engineer in 1986. Early on, LaRossa said, Hanemann demonstrated eagerness to get outside and interact with construction crews.

“She has never shied away from getting involved and literally getting her hands dirty,” LaRossa said. “Her willingness to get out and see what’s going on and work with the crews out in the field gives her a tremendous amount of credibility.”

PSE&G crews managed by Hanemann have begun implementing four transmission overhauls mandated by PJM. The projects span 200 miles — about one-sixth of the Newark-based utility’s 1,200-mile service territory in New Jersey. The most widely discussed is the Susquehanna-Roseland transmission line, a $790 million project across 45 miles in New Jersey north of I-80. The project will follow the route of an existing power line into Pennsylvania; the Keystone State portion will be handled by PPL Corp. That project is to be completed in June 2015.

Among the other critical projects in Hanemann’s portfolio:

  • The Northeast Grid Reliability Project, an $895 million job spanning Bergen, Essex, Hudson and Passaic counties. Completion is planned for June 2015.
  • The North-Central Reliability Project, a $390 million job that includes about 30 miles of tower replacement. Completion is planned for June 2014.
  • Southern Reinforcement, a South Jersey upgrade that’s projected to cost $435 million. Completion is planned for June 2015.

Work entails increasing voltage, replacing transmission lines and rebuilding infrastructure, in some cases involving equipment first installed in the 1920s and 1930s.

“It’s all new equipment,” said Hanemann during an interview at PSE&G’s South Plainfield office. “It might be in the same footprint, but it’s all new.”

PSE&G is not alone in spending capital to improve transmission assets. Morristown-based JCP&L, which serves a smaller slice of central and southern New Jersey communities, last year announced a $200 million, multiyear plan of 17 transmission upgrades. Spokesman Ron Morano said some of those upgrades were mandated by PJM, though others were planned by the utility. Morano said JCP&L will update those plans this year.

Current tasks would seem enough to keep Hanemann busy at PSE&G, but the utility also is trying to drum up interest in its 10-year, $3.9 billion Energy Strong plan. If approved by the Board of Public Utilities, that could increase her workload.

The PJM projects involve immediate upgrades to transmission, in which energy is transferred from power plants to substations, whereas Energy Strong calls for long-term improvements to distribution — the final stage of delivering electricity from substations to customers. Those upgrades, unlike PJM’s, are a response to weather phenomena like Hurricane Sandy.

The plan has come under fire from groups such as the New Jersey Division of Rate Counsel, the Chemistry Council of New Jersey and AARP, which are concerned about the costs that would be borne by commercial and residential ratepayers.

Frank Felder, director for the Center of Energy, Economic and Environmental Policy at Rutgers University, said transmission upgrades are picking up because the recession slowed spending in the past few years.

The mandates leave utilities in a tight place of meeting performance benchmarks while avoiding the perception of cutting corners. At the same time, Felder said, utilities must keep ratepayers satisfied.

“It’s very difficult to do transmission upgrades,” said Felder, who has performed economic analysis for PSE&G upgrades. “Nobody wants to give away their right of way. It’s expensive. Nobody is standing up to say ‘I want to pay for transmission,’ but we all want cheap electricity.”

Hanemann admits pleasing customer demands for durable service and low rates is a challenge. She said improving the long-term resilience of PSE&G’s system has long been a priority, though the spate of violent storms in 2011 and 2012 pushed certain ideas to the fore.

“Sandy and Irene are unlike anything we’ve ever experienced in the past,” she said. “We have to fortify our system to prevent things like this from happening.”

E-mail to: tomz@njbiz.com
On Twitter: @biztzanki

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