The NJBIZ Interview Â Stephen E. MorganWith the summer air conditioning season in full swing, Jersey Central Power & Light in Morristown says itÂs set to avoid a repeat of the problems that plagued the company shortly before and during the blackout that blanketed the Northeast in August 2003. Stephen E. Morgan, president of the utility, says it has invested heavily to upgrade its facilities. The company, a unit of FirstEnergy Corp. of Akron, Ohio, delivers power to more than one million customers in northern and central New Jersey. Morgan spoke with NJBIZ Staff Writer JoÃ£o-Pierre S. Ruth about the the companyÂs moves to maintain reliability.
NJBIZ: What have you done to prevent a recurrence of blackouts?
Morgan: Jersey Central has been working on improving the reliability of its system really since the merger with FirstEnergy. Most of that effort has been concentrated in the last four years. Our capital budget for 2007 is about double what it was in 2002, the first full year after the merger. We went from a $90 million-plus capital budget to about $180 million. The focus of the spending has been in the area of improving our systemÂs operating flexibility, making it stronger, and better bringing things up to new standards. Over that same period, weÂve reduced the customers affected by an outage event by about 15 percent. We put in breakers and fuses as you go down the line.
LetÂs say a squirrel climbs on a transformer in front of your houseÂsomething we canÂt prevent. Instead of 4,000 people seeing an outage, maybe 20 people see an outage. The other thing weÂve done is try and make the outage more identifiable so our response is more targeted and quicker.
NJBIZ: What else have you done?
Morgan: Probably 60 percent or more of our outages were caused by trees. We went through an aggressive tree-trimming program. We normally trim on a four-year cycle. We went through and trimmed that entire four-year cycle in about three years. When a tree limb comes down and damages our facilities, it takes a lot longer to put them back up than if a fuse blows because of an animal contact. By spending the extra money weÂve reduced the average duration of those outages significantly. The average duration of an outage five years ago would have been over 200 minutes. ItÂs now down to about 142 minutes, and is on its way down.
NJBIZ: Could these moves help in restoring service should there be a terrorist attack on the power grid?
Morgan: The good news on the electrical grid is there are very few single points of failure that a person could target and create a major disruption. The nature of the system is such that thatÂs just not likely to occur. The bad news is there are lots of points of failure in a grid that is that extensive and ubiquitous. WeÂve attempted to create what I call operational flexibility. WeÂve made additions to our infrastructure to allow us to transfer customers from one [power] source to another. Some of that is manual closing of switches, some of it is automatic. If an event occurs on one substation circuit feeder [the system] would automatically transfer a big block of that load and customers would only see blinking of their lights.
NJBIZ: Has reliability improved in response to public demand?
Morgan: A lot of folks have a belief that reliability has gone downhill. In our case, it certainly had, and weÂve corrected that problem. I think whatÂs really happening is our expectations as customers continue to go up. Folks in the central New Jersey territory who relocate from New York City are used to a different kind of system than what Jersey Central has. WeÂve evolved over 120 years of our history as a largely rural, small urban electric utility as opposed to say a Con-Ed, which has a massive underground networked infrastructure that is extremely reliable when it works. But when it fails it takes a long time to fix. In our case, we are more prone to things as they occur out in the environment, but they are fairly quickly fixed.
NJBIZ: There is public concern over the expected 10 percent increase in electricity bills this summer. How do you explain to customers why prices are rising so fast?
Morgan: WhatÂs going on right now is that energy prices are going up just like they did two years ago for natural gas.
The auction conducted by the state each year is a three-year forward auction. That price is guaranteed for three years. [As the] underlying price of oil and natural gas has gone up, the prices for electricity were locked in for New Jersey. Now. as we go out for the next auction, the suppliers are bidding what they think will be the cost [of fuel] three years from now, taking into account that they set prices three years ago and had to buy at a higher level than theythought. We really need to step back as consumers and ask ourselves ÂAt what price should we be getting our energy?Â I would maintain that we have relatively cheap energy in this country.