Public Service Electric and Gas’ $12.3 billion base capital investment program over the next five years is focused on ensuring continued reliability, as well as on anticipating, preparing for, and recovering from high-impact, low-frequency events, Public Service Enterprise Group Chairman, President and CEO Ralph Izzo said on April 28.
PSE&G’s investment program includes $6 billion dedicated towards transmission system improvements, Izzo said during the company’s 1Q17 earnings call, adding that $3 billion of electric distribution investment is focused on lifecycle investments to ensure continued top-quartile reliability performance and even better customer service.
He also noted that PSE&G’s base capital program provides the opportunity for annual growth in rate base of 9 percent through 2019, and annual growth in rate base of 7 percent for the five years ending 2021.
“The expansion and/or extension of existing capital programs could lift PSE&G’s five-year capital program by up to $1.5 billion, and raise the growth in rate base from 7 percent to 9 percent per year, over the five-year period,” he said. “At the beginning of March 2017, PSE&G filed for approval to extend its investment in energy efficiency. This request represents a capital investment of $74 million, and you should expect to see PSE&G request an extension of its existing program to replace gas mains and to modernize its electric distribution system later this year.”
Discussing the March filing submitted to the New Jersey Board of Public Utilities, Daniel Cregg, PSEG executive vice president and CFO, said during the call that PSE&G is also seeking recovery of additional administrative and other costs, including costs associated with the enhancement of the information technology system.
“The petition has been deemed complete, which starts a 180-day clock to complete a decision on the filing, and this is expected during the third quarter,” he said.
PSE&G implemented a $121 million increase in transmission revenue under the company’s FERC-approved formula rate on Jan. 1, Cregg said.
PSE&G’s investment in transmission is expected to grow to represent about $7.6 billion of rate base at the end of 2017, or 45 percent of the company’s year-end 2017 consolidated rate base, he said.
Under the Energy Strong infrastructure program, “electric rates are adjusted two times during the year – in March and September – and gas rates are adjusted each year, in September, and under the Gas System Modernization Program, gas rates are adjusted each year in January to reflect the investment made during the prior year,” he said. “Annual revenues in 2017 under both of these programs are forecasted to increase by approximately $55 million.”
Cregg also noted that PSE&G invested $752 million in capital expenses during 1Q17, and is on track to invest $3.4 billion in 2017 on transmission and distribution infrastructure.
“[W]e are maintaining our forecast of PSE&G’s net income for 2017 of $945[million] to $985 million,” he said.
Among other things, Izzo noted that PSEG Power’s construction of 1,800 MW of new efficient combined cycle gas-fired capacity within PJM Interconnection and New England markets is underway at a total cost of $2 billion.
The Connecticut Department of Energy and Environmental Protection recently issued the last set of regulatory permits necessary to begin construction of the Bridgeport Harbor 5 facility, he said. According to PSEG Power’s website, the Bridgeport Harbor Station Combined Cycle Project will add 485 MW of efficient generating capacity to Connecticut’s southwestern region to ensure electric system reliability.
Izzo said that the Keys Energy Center in Maryland and the Sewaren station in New Jersey are scheduled to begin operation in mid-2018, while the Bridgeport facility is scheduled to begin operation in mid-2019.
According to the company’s website, the PSEG Keys Energy Center is a 755 MW combined cycle plant located north of North Keys Road, about 1.25 miles east of Brandywine, Md., while Sewaren 7 is a dual-fuel, 540 MW combined-cycle plant located in the Sewaren section of Woodbridge, N.J.