Hurricane Sandy cost the state’s electric utilities hundreds of millions of dollars in emergency repair and restoration efforts, but as utilities seek to recover those costs — and ponder large-scale infrastructure upgrades — the largest energy users are raising red flags about the potential for runaway spending, as power providers seek…
In December, Atlantic City Electric filed for a $69.7 million rate increase for reliability investments and Hurricane Sandy recovery. Jersey Central Power & Light in February filed a $603 million rate request to cover its Sandy-related costs. And that same month, Public Service Electric & Gas made headlines by proposing Energy Strong, a 10-year, $3.9 billion infrastructure program designed to boost the grid’s reliability and resiliency for years to come.
Thus far, the Board of Public Utilities has taken a cautious approach, calling for cost-benefit analyses and asking PSE&G to provide more details.
Steven S. Goldenberg, an attorney and founder of the New Jersey Large Energy Users Coalition, said even small rate increases add up, particularly for industrial firms that use a lot of energy.
“What that means to some of my members, which are companies that have facilities in other states and other countries, is that they weigh the costs of doing business in New Jersey when they make hiring and firing decisions, when they decide whether or not to make a product in New Jersey, and whether or not to invest capital in their facilities,” he said.
Goldenberg, of Fox Rothschild LLP, said New Jersey already pays some of the nation’s highest rates, even without the potential increases.
But Andrew Hendry, president and CEO of the New Jersey Utilities Association, said Sandy served as a wake-up call to be prepared for more frequent storms of Sandy’s intensity. He said rates aren’t the only factor businesses consider — “They also have to look at what is the negative impact of an outage when there’s a storm,” he said. “There’s a financial impact that occurs. There has to be a balance.”
In a January report, the American Society of Civil Engineers found an $11 billion annual investment would prevent blackouts and brownouts that would otherwise cost businesses $126 billion nationally. Clark Barrineau, a manager of state public relations at ASCE, said operating a 21st-century economy on a 20th-century grid has its own costs.
“We’re already paying for it, so the idea that the money isn’t there is kind of a false equivalency,” he said.
Greg Dunlap, director of marketing and account management for PSE&G’s large customer group, said his clients care deeply about reliability — not just rates. He vividly recalls a conversation with a business owner in the days following Sandy.
“We called a gentleman to tell him we’d have his power restored in a certain period of time, and he told us don’t even bother,” Dunlap said. The loss of inventory and income from the power outage had already cost the man his business, he said.