PSEG urges New Jersey to approve $1.9B gas line replacement program

Dive Brief:

Public Service Electric and Gas Co. has reached a $1.875 billion settlement it hopes will clear the way for a five-year natural gas pipe replacement program aimed at reducing leaks and ensuring safe operations.
PSEG has asked the New Jersey Board of Public Utilities to approve the agreement; staff of the BPU as well as the New Jersey Division of Rate Counsel are among the settlement parties. Other parties to the agreement include the Environmental Defense Fund, unions and labor groups.
PSEG said it can replace 875 miles of gas mains over the program, stressing that because of low natural gas prices this is an "ideal" time to tackle the project.

Dive Insight:

Replacing aging gas pipes is expensive, but because commodity prices have been low in recent years PSEG said now is the time to accelerate its program.

"By year end, we expect to have replaced hundreds of miles of aging gas pipes under the first phase of our Gas System Modernization Program," PSEG President and COO David Daly said in a statement. PSEG says the accelerated pace will help it replace its infrastructure with a modern one by 25 years. In the end, the project would result in "improved safety and reliability," and trim methane emissions, the utility claims.

The extensive gas line replacement proposal has taken significant preparation. PSEG said the agreement "culminates nearly nine months of formal discovery, review and discussions, including public hearings before the BPU." Last year, utility regulators approved new rules to support infrastructure programs of up to five years.

Older cast iron and unprotected steel gas mains will be replaced with plastic piping that is less prone to leaks. PSEG also noted the five-year program is also expected to create about 3,200 sustained jobs.But all of this comes with a hefty pricetag, which is why the utility is urging regulators to approve the program now. Since 2009, low gas prices have helped decrease residential gas heating bills by about half, PSEG noted. PSEG has almost 4,000 miles of cast-iron gas pipes, which it says is more than any other utility.