PSEG CEO: PSE&G invested $2.8bn in 2016 to upgrade transmission, distribution

Public Service Enterprise Group (NYSE:PEG) Chairman, President and CEO Ralph Izzo on Feb. 24 said that Public Service Electric and Gas (PSE&G) invested $2.8bn in 2016 to upgrade and expand its transmission and distribution system.

As part of that work, PSE&G placed into service the 345-kV Northeast Grid Transmission Project, he said during PSEG’s 4Q16 earnings call.

According to the company’s website, that approximately $975m project, which was completed last July, upgraded a 50-mile route of overhead transmission along existing PSE&G rights of way from Roseland, through West Caldwell, North Caldwell, Cedar Grove, Little Falls, Clifton, Bloomfield, Nutley, Belleville, North Arlington, Newark, Lyndhurst, Kearny and Jersey City. 

The overhead transmission portion of the project included new transmission towers designed to withstand wind impacts up to 105 mph, the company said, adding that a 3.5-mile underground transmission circuit was also installed in Jersey City from PSE&G’s Hudson switching station to its South Waterfront switching station.

Additionally, a 15-mile underground circuit was installed through Ridgefield, Ridgefield Park, Bogota, Hackensack, Maywood, Rochelle Park, Lodi, Saddle Brook, Garfield and Clifton, the company said, adding that the project included the reconfiguration of PSE&G’s switching stations in Roseland, Clifton, Saddle Brook, Newark and Jersey City.

Dan Cregg, PSEG executive vice president and CFO, said during the call that PSE&G’s investment in transmission has grown to represent 44%, or $6.7bn, of the company’s consolidated rate base of $15.2bn at the end of 2016.

Noting that PSE&G invested $2.8bn on its transmission and distribution system in 2016, Cregg said that the company is forecast to invest an additional $3.4bn in 2017.

“We are forecasting growth in PSE&G’s net income for 2017 to a range of $945m to $985m, and at the midpoint of that range, the forecast represents 8.5% growth in net income for the year,” he said.

Izzo said, “For 2017, we intend to invest $4.7bn to enhance the efficiency and reliability of our businesses at PSE&G and at [PSEG] Power. This represents a record amount for PSEG to invest in any one year.”

He noted that upgrades to PSE&G’s electric distribution system continued in 2016 under the $1.2bn Energy Strong infrastructure program.

The utility also received approval during 2016 to extend its Solar 4 All program, he said, adding, “The decision by the New Jersey Board of Public Utilities allows PSE&G to build an additional 33 MW – that’s DC – of solar farms on landfills and brownfield sites in the utility service territory.”

PSEG Power invested $1.3bn in capital in 2016, he said, adding, “Construction of 1,800 MW of new efficient combined cycle gas-fired turbine capacity within the PJM [Interconnection] and New England markets, at a total project cost of $2bn, remains on time and on budget. Also during the year, Power invested approximately $300m and nearly doubled the size of its portfolio of solar projects to 400 MW-DC.”

Among other things, he said that coal-fired generation is expected to represent 7% of PSEG’s fuel mix in 2017, with energy produced from natural gas representing 30%, and nuclear fuel generation providing 63% of the company’s energy output.

Earnings report

PSEG on Feb. 24 reported 2016 net income of $887m, “or $1.75 per share, as compared to net income of $1,679 million, or $3.30 per share for 2015.”

Non-GAAP operating earnings for “2016 were $1,475 million or $2.90 per share compared to 2015 non-GAAP Operating Earnings of $1,476 million or $2.91 per share,” PSEG said.

PSEG also reported a net loss for 4Q16 of $98m, or 19 cents per share, compared to 4Q15 net income of $309m, or 60 cents per share. The company added that non-GAAP operating earnings for 4Q16 were $279m, or 54 cents per share, compared to 4Q15 non-GAAP operating earnings of $255m, or 50 cents per share. Among other things, PSEG said that net loss in the fourth quarter reflects the impact of incremental depreciation expense and other expenses of $555m pre-tax associated with the early retirement of the Hudson and Mercer coal/gas-fired generating stations.

About Corina Rivera-Linares 3063 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.