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PSE&G set to begin public hearings on $3.9B infrastructure upgrade plan

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New Jersey’s largest utility company will hold two public hearings later today in Newark on its 10-year, $3.9 billion plan to upgrade to the state’s utility infrastructure — a program that’s been met with resistance from some in the business community.

Public Service Electric & Gas claims the program, which it calls Energy Strong, will help better defend the state against the next Hurricane Sandy. PSE&G plans on funding the project through immediate rate hikes paid for by its customers, rather than increasing prices following the plan’s completion.

The utility is seeking approval from state Board of Public Utilities on the plan.

PSE&G will hold six public hearings in three locations on the program, beginning today at 3:30 p.m. and again at 6:30 p.m. at Essex County College in Newark. The hearing will take place in room 2131 of the J. Harry Smith Hall.

PSE&G spokesman Paul Rosengren said the largest portion of the $3.9 billion will go toward replacing, relocating or enforcing switching stations that flooded during Sandy and Irene. Among other things, the plan also will include developing smart-grid technologies, improving pole distribution, and replacing or updating low-pressure cast-iron gas mains in and around flood zones.

The utility says the higher prices faced by ratepayers would be offset by falling natural gas prices.

But critics of the plan say it’s an overly expensive measure that fails to address the needs of the company’s wider customer base.

Business groups have opposed Energy Strong, saying it would be too costly on top of the rates already paid by the corporate sector.

Elvin Montero, spokesman for the Chemistry Council of New Jersey — a vocal opponent of the plan — said the “overall cost of the plan warrants greater scrutiny,” adding that he believes the timeliness of PSE&G’s request is particularly interesting.

Montero, who attend today’s hearing, said the devastation caused by recent storms such as Irene and Sandy provide “convenient pretext” for the company to push Energy Strong, which he also believes is too expensive.

“Irene happened, Sandy happened,” Montero said. “Then all of a sudden we get this $4 billion proposal?”

State Division of Rate Counsel director Stefanie Brand, who will be testifying today in Newark, said Energy Strong has “many flaws” and ultimately costs “way too much money.”

Brand said the utility’s estimate — which says the upgrades would have prevented outages to some 800,000 customers — amounts to some 39 percent of its customer base. For nearly $4 billion, she said, having 61 percent of customers still be subject to power loss is unacceptable.

Brand said the division is “only interested in actions that bring more benefits than they cost.”

Brand also takes issue with Energy Strong’s funding model, noting that she believes generating the funds through rate hikes is not consistent with state law. She’s also concerned that using ratepayer dollars for the project will not force the company to be as fiscally prudent as it otherwise would’ve been had it planned to fund Energy Strong itself.

PSE&G, Brand said, is “asking for a blank check.”

“When they have to lay out their own money, they have an incentive to keep costs down,” Brand said. “They have an incentive to spend it wisely."

PSE&G spokesman Michael Jennings refutes Brand’s claim, noting that while this would be the largest in scope, several other previous programs have successfully employed similar funding techniques. Regular audits help maintain fiscal responsibility, he said.

“If anything, it provides a greater level of scrutiny,” Jennings said.

Multiple additional hearings on the plan are scheduled for Thursday in New Brunswick at the Middlesex County Administration Building, and on Oct. 7 at the Cherry Hill Municipal Building. The meetings also will be conducted at 3:30 p.m. and 6:30 p.m. at each location.

Andrew George

Andrew George

Andrew George covers the Statehouse from NJBIZ's Trenton bureau. Born and raised in N.J., Andrew has also spent time as a reporter in D.C., Texas and Pa. His email is andrewg@njbiz.com and he is @AndrGeorge on Twitter.

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