PPL Electric raises Susquehanna-Roseland estimate to $560m on materials costs

PPL Electric Utilities‘ portion of the Susquehanna-Roseland transmission line has increased from $500m to $560m as of Sept. 30, a company spokesperson told TransmissionHub Nov. 27.

The $60m cost increase results primarily from an increase in steel costs, the spokesperson said. The increase brings the total estimated cost for the project, which is co-sponsored by Public Service Electric & Gas (PSE&G), to more than $1.3bn.

“We were using that $500m estimate for several years, and when we got close to construction, which we’re now in, and got our contract for the steel, our estimate had to be updated,” the PPL Electric spokesperson said.

Susquehanna-Roseland is a 145-mile, 500-kV transmission line that will run from Berwick, Pa., to Roseland, N.J. About 95% of the route will follow the path of an existing 85-year-old power line that has to be replaced as it is approaching the end of its useful life, PPL has said.

PSE&G’s costs for the project, estimated at $750m, have not risen, a PSE&G spokesperson told TransmissionHub Nov. 27.

The line is expected to be in service before the peak summer demand period of 2015, PPL Electric said in a quarterly filing Nov. 27. Construction has begun on portions of the 101-mile-long route in Pennsylvania.

The National Park Service (NPS) on Oct. 1 issued a record of decision (ROD), affirming the route chosen by PPL Electric and PSE&G as the preferred alternative under the NPS’s National Environmental Policy Act (NEPA) review.

The route had already been approved by the Pennsylvania Public Utility Commission (PUC) and New Jersey Board of Public Utilities (BPU). An appeal of the New Jersey BPU approval is pending before the New Jersey Superior Court Appellate Division, the company said.

“PPL Electric cannot predict the ultimate outcome or timing of any further legal challenges to the project,” PPL Electric said in the filing. “PJM [Interconnection] has developed a strategy to manage potential reliability problems until the line is built. PPL Electric cannot predict what additional actions, if any, PJM might take in the event of a further delay to its scheduled in-service date for the new line.”

On Oct. 15, 10 environmental groups filed a complaint in the U.S. District Court for the District of Columbia, challenging the ROD and seeking to prohibit its implementation.

PPL estimates Sandy restoration costs at over $60m

The company also said its initial estimate for restoration costs as a result of Hurricane Sandy is in excess of $60m, though that figure is still being finalized. The company has insurance that “could cover a portion of the costs,” PPL Electric said in the filing.

PPL Electric will have the ability to file a request with Pennsylvania state regulators for permission to defer for future recovery certain costs incurred to repair the distribution network in excess of the insurance coverage, the company said in the filing. Costs incurred to repair the transmission network are recoverable through the FERC formula rate mechanism, updated annually.

In late October, PPL Electric experienced widespread significant damage to its transmission and distribution network from Hurricane Sandy. 

PPL Electric is a subsidiary of PPL (NYSE:PPL) and PSE&G is a subsidiary of PSEG (NYSE:PEG). 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.