Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. PUBLIC SERVICE ELECTRIC & GAS CO (81033) 10-Q published on Aug 01, 2018 at 4:40 pm
Reporting Period: Jun 29, 2018
On the morning of July 5, 2018, PSE&G discontinued electricity to the home of a customer residing in Newark because of outstanding arrears on that customer’s account. Subsequent to the discontinuation of electricity, that customer died on the afternoon of July 5th. The family of the customer, who was on hospice care, has raised allegations in the media regarding PSE&G’s conduct surrounding the discontinuation and restoration of electricity to the home of the customer, claiming that the discontinuation of electric service prevented the customer from using life sustaining medical equipment. The BPU has initiated an investigation into the matter. In addition, PSE&G received a grand jury subpoena from the Essex County Prosecutor’s Office (ECPO) for records and correspondence between PSE&G and the customer. PSE&G is fully cooperating with the BPU and the ECPO in both proceedings. The PSEG Board of Directors retained outside counsel to conduct an independent investigation of the facts surrounding this incident with the full support and cooperation of management. PSEG cannot predict the outcome of this matter.
At PSE&G, we continue to invest in T&D projects that focus on reliability improvements and replacement of aging infrastructure. Over the next five years, we expect to invest between $12 billion and $15.5 billion in our business which is expected to provide an annual rate base growth of 8%—10%. We are forecasting completion of our Energy Strong Program I (ESP I) and Gas System Modernization Program I (GSMP I) this year. We have received approval for the GSMP II, an expanded, five-year program totaling $1.9 billion that will start in 2019. In June 2018, we filed for our Energy Strong Program II (ESP II), a proposed five-year $2.5 billion program to harden, modernize and make our electric and gas distribution systems more resilient. We also expect to file our proposed Clean Energy Future program later this year, a six-year estimated $2.9 billion program focused on achieving New Jersey’s energy efficiency targets, as well as supporting electric vehicle infrastructure and battery storage initiatives. Over the past few years, these types of investments have altered our business mix to reflect a higher percentage of earnings contribution by PSE&G.
Consistent with New Jersey’s recently enacted energy efficiency legislation, which is more fully described under Part II, Item 5. Other Information, PSE&G has outlined a clean energy proposal to invest $2.9 billion over six years in energy efficiency and other programs that will reduce energy bills and combat climate change, which we refer to as our Clean Energy Future program. The program, which PSE&G expects to file with the BPU later this year, includes: $2.5 billion for energy efficiency to reduce customer bills and lower energy use, which will decrease air pollution, including emissions that accelerate climate change; $300 million for building a “smart” electric vehicle infrastructure; and $100 million for utility-scale energy storage systems that will enable greater development of renewable resources and enhance resiliency.
December 31, 2017 Form 10-K page 16 and March 31, 2018 Form 10-Q on page 80. In April, 2018, PJM submitted two proposed alternative and mutually exclusive capacity market reforms for FERC’s approval. One option would be to implement a two-tier clearing mechanism that accommodates states’ subsidies and the other option would be to extend the existing MOPR to units that are receiving subsidies. In June 2018, FERC issued an order finding that PJM’s current capacity market is unjust and unreasonable because it allows resources supported by out-of-market payments to suppress capacity prices. FERC established a new proceeding to address an alternative approach in which PJM would: (1) modify PJM’s MOPR so that it would apply to new and existing resources that receive out-of-market payments, regardless of resource type; and (2) establish an option that would allow, on a resource-specific basis, resources receiving out-of-market support to be removed from the PJM capacity market, along with a commensurate amount of load, for some period of time. FERC’s potential action in this proceeding could cause nuclear units that receive ZEC payments to lose capacity market revenues if states do not take steps to address the potential loss of capacity revenues. In addition, depending on the outcome of this matter, our fossil generating stations could be adversely impacted. We cannot predict the outcome of this matter.
December 31, 2017 Form 10-K page 19. In June 2016, a proposed settlement was filed with FERC for a matter remanded from the federal appellate court concerning the appropriate cost allocation for certain 500 kV projects in PJM that either have been built or are in the process of being built. In May 2018, FERC approved the settlement which will result in increased annual cost allocations to customers in the PSE&G transmission zone. Under this settlement, Power, as a BGS supplier will become obligated to pay amounts previously paid by other PJM transmission customers. However, we do not believe that the anticipated level of any such potential payments would have a material effect on Power’s financial statements. We believe that there is a mechanism in place under the BGS contract for the pass-through of increases in transmission charges.