PSE&G Bills Set To Drop, Even With Extra Spending For Upgrades

The Record ( — Wednesday, March 20, 2013

The Record

While Public Service Electric and Gas Co. plans to spend $3.9 billion to protect its power system from catastrophic storms, customers' bills will drop in five years, the state's largest utility said Wednesday.

But several critics pointed out that the bills would go down even more without the extra spending.

Providing more detail on the rate impact of the plan laid out last month, PSE&G said it will be able to lower annual rates by about $12 by 2018 for the typical residential gas and electric customer, because several surcharges will expire over the next four years, and because natural gas prices have dropped nearly 40 percent in the last four years.

"The timing is right to get this work done without increasing customers' total bills," Ralph LaRossa, PSE&G president, said in a conference call Wednesday about the Newark-based utility's $3.9-billion "Energy Strong" program. When it introduced the plan last month, PSE&G did not offer dollar amounts on how much rates might change, but said it aimed to keep them flat through 2018.

But Stefanie Brand, director of the state Division of Rate Counsel, said that ratepayers should enjoy more of the cost savings created by the lower gas prices and the end of the surcharges. "What PSE&G is saying is, 'We're going to fill that space with new spending,'" she said. "I think ratepayers are entitled to some of the benefits."

Without the Energy Strong spending, rates would drop by an estimated $8 a month for the typical residential customer, LaRossa said. Brand estimated the savings at 8 percent. The average residential gas and electric bill is about $200 a month.

Elvin Montero, a spokesman for the Chemistry Council of New Jersey, called PSE&G's plan "Energy Wrong," and said that the state's residential and business customers already pay some of the highest power costs in the nation. The council is part of a coalition, including AARP, NJ Public Interest Research Group, NJ Citizen Action and N.J. Large Energy Users Coalition, that is questioning the use of ratepayer funds for Energy Strong.

PSE&G gave the rate estimates in a filing with the state Board of Public Utilities. The board's president, Robert Hanna, told the utility in a regular meeting Wednesday that it needs more details on Energy Strong before it can evaluate the plan.

Along with the residential savings, PSE&G said that rates would also drop for business customers. For example, said LaRossa, an industrial customer using 85 million kilowatts a year would pay an estimated $1 million less in 2018 than today.

These estimates depend on natural gas prices staying at current rates. Montero, of the Chemistry Council, said it's unrealistic to believe that natural gas prices will remain low.

"A lot can happen in the next five years," he said.

Energy Strong was proposed in response to superstorm Sandy, which knocked out power to 2 million of PSE&G's 2.2 million customers. It would protect more than 40 electrical substations from flooding, including eight in Bergen and Passaic counties; bury 20 miles of power lines; strengthen lines against stronger winds, and replace and modernize gas mains. The 10-year project would create 5,800 jobs, PSE&G said.

PSE&G has about 400,000 customers in Bergen County and 190,000 in Passaic.

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