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$3B in grid upgrades proposed for utility spinoff

Another round of upgrades would come to New Jersey’s power grid under a plan to create a new company to finance up to $3 billion worth of work across a region that includes areas served by Jersey Central Power & Light.

The plan, pending before state regulators, calls for a JCP&L spinoff to undertake improvements to aging high-voltage electricity transmission towers and lines that connect power plants with local electricity distribution systems run by JCP&L and two power companies in Pennsylvania. All are subsidiaries of Ohio-based First Energy Corp.

The new company would, over 10 years, replace electricity transfer stations and lines, install newer technology to help speed up repairs during power outages and beef up security against potential physical and cyberattacks.

In seeking approval for the new setup from the state Board of Public Utilities, First Energy says it would save about $135 million through lower interest rates that the consolidated company could get when borrowing money for various projects, versus rates available to the three separate utilities.

While the plan would lower costs, the actual effect on electricity customers’ bills would not be known until rate increases are sought to pay for different projects, said JCP&L spokesman Ronald Morano. JCP&L serves about 1.1 million customers, mainly in northwestern and central New Jersey, including Morris County and six Passaic County municipalities.

Public hearings on the plan are scheduled Monday at 6 p.m. in the Morris County Administration Building in Morristown and Wednesday in Freehold.

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Similar requests for approval of the spinoff company are pending before regulators in Pennsylvania and the Federal Energy Regulatory Commission.

The proposal “will allow new, and needed, transmission projects that will make the system more resilient and lower costs for customers,” said Morano. The plan calls for the new company, called Mid-Atlantic Interstate Transmission, to buy the transmission lines from JCP&L and two First Energy companies in Pennsylvania.

First Energy’s new strategy faces questions from a New Jersey agency about how it would affect JCP&L’s finances and the state’s oversight of the power grid.

Stefanie Brand, director of the state Division of Rate Counsel, which represents consumers in utility matters, said her office would focus on whether JCP&L gets paid a fair price for the transmission lines so it would remain financially stable.

She also raised concerns about transmission line oversight that could be shifted under the plan from New Jersey to federal regulators.

The proposal marks the latest effort in New Jersey by regulators and utilities to improve the power grid following major storms in 2010 through 2012 that led to power outages of up to two weeks. About $2.7 billion worth of electric and gas distribution system improvements are under way, in the planning stages or pending before the BPU by other utility companies serving North Jersey.

The First Energy plan calls for:

–Rebuilding or replacing “older” and “vintage” transmission lines, replacing circuit breakers and transformers with equipment that can be monitored online and installing transmission switches that limit the impact when breakers fail.

–Improving security with high-definition, motion-sensor cameras and key-card locks around transmission lines and upgraded digital communication and computer data encryption.

–Upgrading power stations to handle more power and continue operating during maintenance.

This article was written by Dave Sheingold from The Record, Hackensack, N.J. and was legally licensed through the NewsCred publisher network.

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