UPDATE: PSE&G Wins NJ Approval For $515 Million In Solar Projects
29 Juli 2009 - 7:59PM
Dow Jones News
New Jersey regulators on Wednesday cleared Public Service
Electric & Gas Co. to spend $515 million on 80 megawatts worth
of solar-power projects across the state through the end of
2013.
The state's Board of Public Utilities unanimously approved plans
by the unit of Public Service Enterprise Group Inc. (PEG) to place
40 megawatts worth of solar generators on 200,000 utility poles,
plus another 40 megawatts of small, "solar gardens" and roof-top
facilities, mostly on company-owned property. The contract to
supply the pole-mounted panels is going to privately held Petra
Solar, of Plainfield, N.J.
The program will be paid for with electric-rate increases, with
costs offset by federal tax credits and state solar renewable
energy credits.
"Our program will effectively double the size of New Jersey's
installed solar capacity," PSE&G President and Chief Operating
Officer Ralph LaRossa said in a press release.
The approvals fell short of PSE&G's original, $773 million,
120-megawatt solar-program proposal from February. The board
rejected the company's plans to own and operate panels on the roofs
of state government buildings and to install roof-mounted systems
on affordable-housing complexes, though PSE&G was cleared to
work with solar developers to install 10 megawatts of capacity on
third-party sites and another five megawatts in New Jersey Urban
Enterprise Zones.
The approved solar facilities have a 10% rate of return on
equity and are part of $1.4 billion of regulated projects PSE&G
has won state approval for this year. Earlier this month, the board
cleared PSE&G to invest $190 million in energy-efficiency
projects and in April it won approval for $694 million in power-
and natural gas-infrastructure upgrades. In addition to owning New
Jersey's biggest utility, Public Service Enterprise runs a fleet of
coal, nuclear and gas-fired power plants, mostly in the Northeast,
that sell their output in regional markets. It is scheduled to
report its second-quarter earnings on Friday.
The company said it expects the average monthly customer bill to
rise by about 10 cents in the first full year of the program, with
increases up to 35 cents a month in 2013. As with the
infrastructure and efficiency projects, PSE&G will get
real-time rate recovery under the board's approval instead of
facing the traditional time lag.
"In order to make these investments, we could not wait a
considerable period of time" for rate recovery, Public Service
Enterprise Chief Executive Ralph Izzo said in a telephone
interview.
"While the monthly rate impact is small, the reason why it's
small is that these are not a lot of megawatts," added Izzo. "We
think this is a good idea for a variety of reasons...," but "this
is expensive," he said, noting the solar generation costs five to
seven times more than traditional energy sources.
Besides the solar and energy-efficiency programs, Public Service
Enterprise is in a joint venture with wind-power firm Deepwater
Wind to explore development of New Jersey's first offshore wind
farm.
Public Service Enterprise shares were recently down 1.6% at
$32.40.
For Petra Solar, the deal to provide the pole-top panels is
worth about $200 million and is "truly transformational in multiple
areas," founder and Chief Executive Shihab Kuran said.
The venture capital-backed company aims to hire more than 100
new employees, bringing its workforce to 140-150 people. The
company, founded in 2006, declined to get into the residential and
commercial market, focusing instead on providing equipment to
utilities. Kuran said Petra Solar was in "active engagement with
tens of utilities" for future deals, adding the company aims to go
public within the next two years, if market conditions are
favorable.
-By Mark Long, Dow Jones Newswires; (212) 416-2145;
mark.long@dowjones.com