Who could ever argue with PSE&G’s initiative — and accompanying request for rate increase — to upgrade its infrastructure and make all of its customers somewhat more protected from the ravages of mother nature, such as those inflicted by Hurricane Sandy?
The proposal, made February 20, calls for a $3.9 billion investment over the next 10 years to help safeguard its electric and gas systems following damage from the recent hurricanes. If the funding proposal is approved by the Board of Public Utilities, the investment would be paid for by increased rates to consumers. But PSE&G officials maintain that the consumers will hardly feel the increase because energy costs have been lower in the past five years due to decreased costs of natural gas.
“The good news is that the timing is right to get the work done now without increasing customers’ bills,” Ralph Izzo, PSE&G CEO, was quoted as saying. “Interest rates are low and labor is available.”
Coming at a time when the state is still facing a high unemployment rate, who could argue? As it turns out, several groups have already voiced opposition to the proposal.
The AARP of New Jersey issued a press release opposing the program. “In light of all that our fellow New Jerseyans have and continue to endure, we call on the Board of Public Utilities to carefully and diligently scrutinize the sheer size of this request and its impact on maintaining affordable utility services — especially for those living on low and fixed incomes — and whether the benefits outweigh the costs of the company’s proposed projects,” said Dave Mollen, AARP New Jersey’s president.
Another note of opposition came from the Chemistry Council of New Jersey (CCNJ). In a statement also issued on February 20 the group called “upon the Board of Public Utility, legislators, and other elected officials in the wake of Superstorm Sandy, to be mindful of all ratepayers when reviewing the multi-billion dollar proposals in additional utility costs that purportedly reflect the costs of storm recovery or improvements to the reliability of utility infrastructure in advance of ‘the next Sandy.’ While CCNJ does not question the need for storm relief and reliable utility systems, there is a significant concern that the crisis created by Sandy is being used as a pretext for the advancement of ineffective and unnecessarily expensive utility programs.”
The statement quoted Hal Bozarth, executive director of the CCNJ:
“Isn’t it ironic, a day after PSE&G’s parent company declared yet another increase in the company’s common dividend, it asks ratepayers to foot the bill to improve its infrastructure to the tune of $4 billion? It is unreal!”
The Chemistry Council continued: “PSE&G’s parent company is proud about being able to pay annual dividends on an uninterrupted basis since 1907. Perhaps the billions of dollars paid to shareholders could have possibly been reduced and redirected to make the necessary investments to its infrastructure and make the utility ‘Energy Strong’ since 1907, and not since 2013 . . . The inaction of PSE&G to effectively invest in its own systems through the years has cost all of us, and New Jersey ratepayers not only continue to pay the ninth highest electricity rates in the nation, but must now pay to fix PSE&G’s infrastructure and see their rates increase by $4 billion.”
“Today’s $4 billion request by PSE&G is in addition to its pending ‘Solar 4 All Extension’ proposal, an objectionable and unnecessary investment that the state’s Division of Rate Counsel estimates will cost ratepayers an additional $2 billion.
“New Jersey’s industrial electricity rates are 57 percent above the national average and continue to put our member companies at a competitive disadvantage . . . CCNJ’s average-sized company using 20 million kWh per year would see an additional annual increase of $168,000.”
But other groups were quick to support PSE&G. NJ Building and Construction Trades Council President William T. Mullen on February 20 issued the following statement in support of the utility’s initial $2.6 billion program, which it referred to as a “jobs-creation plan.”
“Once approved, today’s PSE&G filing would provide a much-needed shot of adrenalin to the New Jersey economy,” said Mullen. “The state also will realize a double-shot of relief by the upgrades to our intricate utility infrastructure and will create thousands of valuable construction jobs. Creating jobs and repairing the state’s utility infrastructure is the perfect combination.”
“PSE&G’s comment to utility upgrades is an investment in New Jersey’s future that will pay substantial dividends by spurring economic growth and creating valuable jobs,” Mullen added. “Rather than taking a piecemeal approach that would provide only incremental benefits, PSE&G has put forward a substantial program that would provide significant impro1vements, which will put a lot of people back to work.”
“It would create good jobs through investments to help New Jersey be better prepared for the next Hurricane,” Mullen said. “The Board of Public Utilities should act swiftly on this proposal since it would protect utility installations from flooding, put in additional electric distribution lines, improve communications along the grid and modernize the gas distribution system.”
The building trades group predicted that the PSE&G proposal would create more than 5,800 jobs and noted that the work includes storm protection at more than 40 utility installations — including building flood walls and raising equipment at stations that move electricity across the grid. Other improvements would include installing additional electric distribution lines, making the grid smarter and modernizing the natural gas distribution system.
Similar support came from the American Society of Civil Engineers. “We believe investment in infrastructure leads to business growth and greater economic competitiveness in the global marketplace,” he said. “If we don’t invest in infrastructure, the American economy will suffer, eventually resulting in the loss of jobs, personal income, and the GDP,” said a spokesman.
New Jersey Chamber of Commerce President and CEO Thomas Bracken weighed in with a similar endorsement.
“Investing in a reliable and resilient energy infrastructure that is better able to withstand powerful and damaging storms like Sandy and other natural disasters will help keep New Jersey competitive and open for business. PSE&G’s initiative would upgrade switching stations and substations and replace cast iron gas mains in or near flood hazards. This focus will ultimately create redundancy to reduce outages and provide New Jersey with a stronger and more sustainable energy system.”
During Hurricane Sandy an estimated 2 million of PSE&G’s 2.2 million customers lost power due to damaged switching and substations, damaged poles and electrical equipment, and downed trees, the company said. In making its request the company cited the increasing frequency and severity of violent storms.