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NJ approves $842M grid upgrade plan for PSE&G

New Jersey regulators have approved a pared-down plan for Public Service Electric and Gas Co. to improve the reliability and resilience of its electric and gas systems.

The Public Service Enterprise Group Inc. subsidiary initially proposed a five-year, $2.5 billion plan, known as Energy Strong II, but later agreed to trim it down to a cost of approximately $842 million. The New Jersey Board of Public Utilities on Sept. 11 approved a stipulation that outlines the terms of the scaled-back effort.

The board also put off until March 2020 a decision on PSE&G's proposed $2.8 billion energy efficiency plan. Instead, regulators approved a stipulation under which PSE&G will continue operating four energy efficiency programs for another year.

PSE&G spokesman Michael Jennings said the second phase of the Energy Strong initiative includes projects to mitigate flooding at 16 electric stations that serve 166,000 customers and to subdivide more than 1,100 circuits that serve 1.2 million customers. The investments also will let PSE&G harden approximately 80 miles of power lines and update grid communications and will allow it to make updates to six gas distribution stations.

"These improvements will help us to continue to provide reliable, resilient energy to our customers, no matter the weather conditions," Jennings said.

The board approved the first energy strong program in 2014, and PSE&G filed for approval of a second phase in June 2018. In late August, PSE&G, board staff, the New Jersey Division of Rate Counsel, New Jersey Large Energy Users Coalition and AARP Inc. came to an agreement on the proposal and filed the stipulation with regulators.

The deal allows PSE&G to spend up to $389 million on electric station flood mitigation and up to $145 million to harden its electric distribution system and increase system resilience. It also can invest up to $72 million to install a private wireless communications network and eliminate the use of dedicated phone lines for remote communication for both PSE&G and customer equipment. The company further can invest another $35 million to develop an advanced distribution management system to replace its existing outage management system.

On the gas side, the deal lets PSE&G invest up to $50.5 million to rebuild or modernize the gas metering and regulation stations.

PSE&G also can spend $150.5 million on certain capital projects over the program's five-year term that will be considered stipulated base expenditure to be recovered in the utility's next base rate case so as long as the investment is found to be prudent. Most of that money — $100 million — will be spent at PSE&G's discretion toward "electric outside plant higher design and construction standards ... and/or electric life cycle subprograms" identified in the Energy Strong II petition. The remaining $50.5 million will be used to complete the six gas metering and regulation station upgrades.

The company is to file a base rate case (New Jersey BPU dockets EO18060629 and GO18060630) by Dec. 31, 2023.

The utility filed for approval of its energy efficiency program (New Jersey BPU dockets GO18101112 and EO18101113) in October 2018 and in September reached a stipulation with board staff, the Rate Counsel, the Eastern Environmental Law Center, the Keystone Energy Efficiency Alliance and the New Jersey Large Energy Users Coalition.