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Released August 05, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Corporate leaders at Public Service Enterprise Group Incorporated (NYSE:PEG) (PSEG) (Newark, New Jersey), the parent of New Jersey's largest electric and gas utility, plan to increase capital expenditures (capex) at the company's regulated utility business by more than 12%, to between $18 billion and $21 billion over the 2024-2028 period. In its prior five-year period, 2023-27, capex totaled between $16 billion and $18.5 billion, company officials said July 7.
Click on the image at right to see PSEG's current and prior five-year capex plans.
PSEG's transmission & distribution (T&D) utility, Public Service Electric & Gas (Newark), delivers electricity to 2.4 million customers and natural gas to 1.9 million customers, all in New Jersey. While regulated operations account for most of the corporate parent's business, it also operates a carbon-free merchant power business, PGEG Power, that owns or operates three nuclear power stations in the New Jersey-Pennsylvania area and other power-generation assets.
On July 30, three weeks after PSEG officials spoke with investors, the company reported second-quarter earnings of $434 million, down from the $591 million the company earned in the comparable year-earlier quarter. Quarterly revenue held steady at about $2.4 billion.
Commenting on second-quarter earnings, Ralph LaRossa, PSEG's chair, president and chief executive officer, said the company "responded well to the extreme conditions we experienced during the quarter, which included an early summer heat wave and one of the strongest earthquakes in New Jersey history, with minimal system disruption."
The company's merchant power unit, PSEG Power, "continues to pursue multiple growth opportunities that include capacity uprates, hydrogen pilots and potential sales to data centers," he continued. And the utility unit, PSE&G, "is experiencing an increase in new business requests and feasibility studies from potential data center customers across our service area compared with 2023 activity, which, along with increased electric vehicle (EV) charging, is expected to drive load growth and system investment needs in the future," LaRossa added.
That's why the utility is upping its planned five-year capex program. On its July 7 investor call, company officials said most planned capital outlays in the regulated businesses through 2028 align with clean-energy policies throughout New Jersey, including investments to modernize utility infrastructure, investments to support decarbonization and investments in a recently awarded competitively bid for transmission.
Industrial Info is tracking seven PSEG capital projects valued at about $694 million. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.
On that July 7 call, investors were told: "Significant events (i.e., the Northeast Blackout of 2003 and Superstorm Sandy) have driven policy changes and led to investment opportunities. Future investment will address growing demand for electrification and need for an even more reliable grid, all aligned with New Jersey and federal energy policies."
These projects include:
Click on the image at right to see a functional breakdown of planned capex investments across PSEG's regulated business units.
In PSE&G's electric transmission business, company officials told investors July 7 that planned investments will focus on upgrading its 69-kilovolt (69-kV) assets to support future electrification efforts. These activities include:
These distribution-system investments include:
Looking out over a 10-year horizon, company officials told investors July 7 that the regulated utilities' investment opportunities support New Jersey Governor Phil Murphy's executive orders from February 2023 that seek to accelerate the decarbonization of the state's economy. No capex estimates were provided for these longer-range goals, which could include:
Click on the image at right to see PSEG's current and prior five-year capex plans.PSEG's transmission & distribution (T&D) utility, Public Service Electric & Gas (Newark), delivers electricity to 2.4 million customers and natural gas to 1.9 million customers, all in New Jersey. While regulated operations account for most of the corporate parent's business, it also operates a carbon-free merchant power business, PGEG Power, that owns or operates three nuclear power stations in the New Jersey-Pennsylvania area and other power-generation assets.
On July 30, three weeks after PSEG officials spoke with investors, the company reported second-quarter earnings of $434 million, down from the $591 million the company earned in the comparable year-earlier quarter. Quarterly revenue held steady at about $2.4 billion.
Commenting on second-quarter earnings, Ralph LaRossa, PSEG's chair, president and chief executive officer, said the company "responded well to the extreme conditions we experienced during the quarter, which included an early summer heat wave and one of the strongest earthquakes in New Jersey history, with minimal system disruption."
The company's merchant power unit, PSEG Power, "continues to pursue multiple growth opportunities that include capacity uprates, hydrogen pilots and potential sales to data centers," he continued. And the utility unit, PSE&G, "is experiencing an increase in new business requests and feasibility studies from potential data center customers across our service area compared with 2023 activity, which, along with increased electric vehicle (EV) charging, is expected to drive load growth and system investment needs in the future," LaRossa added.
That's why the utility is upping its planned five-year capex program. On its July 7 investor call, company officials said most planned capital outlays in the regulated businesses through 2028 align with clean-energy policies throughout New Jersey, including investments to modernize utility infrastructure, investments to support decarbonization and investments in a recently awarded competitively bid for transmission.
Industrial Info is tracking seven PSEG capital projects valued at about $694 million. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.
On that July 7 call, investors were told: "Significant events (i.e., the Northeast Blackout of 2003 and Superstorm Sandy) have driven policy changes and led to investment opportunities. Future investment will address growing demand for electrification and need for an even more reliable grid, all aligned with New Jersey and federal energy policies."
These projects include:
- "Last Mile" distribution system investments to increase reliability and prepare for electrification
- Gas distribution system upgrades that target methane leaks and replacement of infrastructure
- Energy efficiency programs that reduce energy usage, emissions and customer bills
- EV programs that address the leading source of emissions in New Jersey
- Federal production tax credits (PTCs) that help preserve the viability of the company's nuclear units. Those PTCs also offer opportunities to invest in power plant uprates, fuel-cycle extensions and power plant license extensions
- PSEG's carbon-free nuclear fleet supports incremental opportunities for hydrogen that support the state's economic development efforts to attract high-tech industry
- Competitively bid, interstate electric transmission projects regulated by the Federal Energy Regulatory Commission (FERC) (Washington, D.C.)
Click on the image at right to see a functional breakdown of planned capex investments across PSEG's regulated business units.In PSE&G's electric transmission business, company officials told investors July 7 that planned investments will focus on upgrading its 69-kilovolt (69-kV) assets to support future electrification efforts. These activities include:
- Transitioning from large end-of-life projects to 69-kV conversions and expansions, as well as constructing new stations, to improve reliability, address an aging system and prepare for load growth, including future electrification efforts
- Investing in lifecycle projects such as upgrading or replacing overhead conductor and lines
- Pursuing broader opportunities in interstate electric transmission, including competitively bid opportunities that address reliability needs
These distribution-system investments include:
- Modernizing circuits through targeted replacement of various assets to support reliability, system hardening and future electrification
- Upgrading or eliminating aging electric distribution substations and switchgear to support future growth of EVs and distributed energy resources while also addressing expanded security requirements
Looking out over a 10-year horizon, company officials told investors July 7 that the regulated utilities' investment opportunities support New Jersey Governor Phil Murphy's executive orders from February 2023 that seek to accelerate the decarbonization of the state's economy. No capex estimates were provided for these longer-range goals, which could include:
- Electrifying transportation: No internal combustion engine vehicles sold after 2035 and increased incentives for medium- and heavy-duty EV adoption
- Incremental clean energy investments in solar generation, energy efficiency, EVs and battery energy storage
- Improved "last mile" electric reliability work to support accelerated EV adoption and electrification
- Accelerated replacement of aging gas mains that are more prone to leaks and breaks
- Potential investments for low carbon fuels, such as hydrogen, that can be integrated into gas distribution system
