New Jersey's largest regulated utility has a $4 billion plan to make the Garden State greener and advance the state's bid to become a clean energy leader.
PSE&G on Thursday revealed a six-year plan called Clean Energy Future that aims to reduce the state's energy consumption and carbon emissions, while driving down electric power costs. The proposal calls for spending $2.8 billion on energy efficiency programs and hundreds of millions on electric vehicle infrastructure, energy storage and state-of-the-art electricity meters.
PSE&G, which operates New Jersey's transmission and distribution lines, believes the plan will save customers $7.4 billion, though some rate payers could see their bills tick higher. It is also forecast to cut carbon emissions by 40 million tons, roughly equal to taking 380,000 cars off the road by 2025.
The company is casting its proposal as a response to Democratic Gov. Phil Murphy's ambitious clean energy and climate goals.
In May, Murphy signed legislation that set ambitious targets for offshore wind power and energy storage, required utilities to cut electric power bills and sought to expand solar power. The legislation also made New Jersey one of a handful of states that has vowed to generate 50 percent of its energy from renewable sources by 2030.
The proposal is "a great opportunity for us to be aligned with our government and do well by the environment and our employees and our customers, while giving our investors another growth opportunity," said Ralph Izzo, chairman and CEO of PSE&G parent company Public Service Enterprise Group.
Most of the investment would go to energy efficiency programs because it's the most efficient way to reduce customer costs while cutting energy use and greenhouse gas emissions, Izzo told CNBC.
The funds would underwrite rebates and incentives for energy-efficient appliances and equipment, as well as funding to adopt energy-saving techniques. PSE&G would also offer free or low-cost consulting, tools and installations to residences, businesses and local governments.
Those programs alone would save ratepayers $5.7 billion, according to PSE&G, though the savings would mostly accrue to residents and companies that take advantage of the program. Those who don't could see their electric power bill increase by $6 a year, the company estimates. PSE&G plans to advise policymakers to focus on pushing the programs to low-income households, apartments and municipal buildings.
The plan also commits $364 million for electric vehicle chargers in up to 37,000 homes and 2,200 mixed-use buildings and for additional units in 150 fast-charging stations on public roadways. PSE&G also plans to award grants to school districts to purchase 50 to 100 electric school buses, primarily in low-income areas.
Izzo says the company's experience managing the flow of electricity on New Jersey's power lines makes PSE&G a prime candidate to jump start the buildout of New Jersey's EV charging infrastructure.
"It's no different than why we took the lead years ago in solar and oftentimes why a regulated utility takes the lead: to get the market going," he said. "Once the market is functioning, it's not a monopoly, and we can and should back away."
The proposal also dedicates $180 million to build 35 megawatts of energy storage systems over the next six years. Those systems help store power generated by wind and solar farms, encouraging the adoption of renewable energy.
A final pillar of the plan, dubbed Energy Cloud, would allocate nearly $800 million to upgrade all 2.2 million electric meters in PSE&G's statewide network. New "smart" meters would feed real-time data to the utility and help the company restore service more quickly during blackouts.
The company previously announced plans to spend $2.9 billion on energy efficiency programs and electric vehicle infrastructure. The final proposal announced on Thursday includes a spending increase on some initiatives and a new commitment to deploying the smart meters.
PSE&G is submitting the plan to the New Jersey Board of Public Utilities, which must decide on the proposal. Some members of the state's Division of Rate Counsel, which advises the board, have expressed skepticism about PSE&G's earlier plan, in part because its parent company benefits from new nuclear power subsidies.
In addition to signing the renewable energy legislation, Murphy also approved a law to subsidize nuclear power plants, the state's largest source of zero-carbon energy.
The measure was hotly debated and benefits New Jersey's Salem and Hope Creek nuclear plants, which are owned by PSEG Power. The company had said the plants could close unless they received state aid.