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NJ regulators approve $79M storm resiliency plan for Atlantic City Electric

Atlantic City Electric Co. will spend $79 million over five years in a bid to make its electric grid more resilient to storms and reduce outage restoration times.

The PowerAhead program approved by the New Jersey Board of Public Utilities on May 31 includes investments like structural and electrical hardening, selective undergrounding, and a new substation.

"With the lessons of past storms on our minds and hurricane season upon us, the board appreciates the need to harden utility infrastructure to withstand threats that come with major storm events," BPU President Richard Mroz said in a statement.

The Exelon Corp. subsidiary in March 2016 asked to spend $176 million on the program. However, the utility later reached a stipulation that outlined a $79 million investment and an associated recovery mechanism. That mechanism allows rate recovery on a provisional basis of all expenditures related to facilities that have been placed in service, the BPU said.

The associated costs will be subject to BPU review in the utility's next base rate case, which is to be filed within three years. The BPU said the cost recovery mechanism strikes a balance between Atlantic City Electric's need to earn a reasonable rate of return over the life of the investments and protecting ratepayers from paying more than reasonably necessary.

Ratepayers will see no rate impact until an improvement project is placed in service, the BPU said.

Atlantic City Electric said the program's distribution rate adjustment will result in a rate increase for a typical residential customer using 716 kWh per month of 49 cents, or 0.38%, upon completion of all projects after five years. The first rate adjustment is not expected to occur prior to July 2018, the utility said.

"Modernizing our energy infrastructure and upgrading our existing electrical systems is critical to providing quality service to our customers," Vince Maione, Atlantic City Electric's region president, said in a statement. "PowerAhead will not only strengthen the electric grid and make it more resistant to severe storms, it will also help create jobs that will have a positive impact on our South Jersey economy."