Public Service Electric and Gas Company (PSE&G) has signed a $905m in principle settlement with the New Jersey Board of Public Utilities (BPU) and the New Jersey Division of Rate Counsel to replace the ageing gas infrastructure.


In March, the firm sought approval from the BPU to replace 800 miles of cast iron and unprotected steel gas mains, and 55,000 unprotected steel service lines to homes and business with an investment of $1.6bn over a five-year period.

As per the settlement, the company has to replace up to 510 miles of gas mains and 38,000 service lines with durable plastic piping which will reduce the potential leak and methane gas release.

Work will be carried out in three-year duration.

PSE&G will now submit the agreement signed with the parties, with details of the gas system modernization program, for formal approval from the BPU.

Based on accelerated recovery mechanism, the utility expects to earn a return on equity of 9.75% on $650m of investment.

The remaining $255m is planned to be recovered in a base rate case which will be requested by November 2017.

PSE&G president and COO Ralph LaRossa said: "Although the agreement calls for a three-year program, we will have the ability to make a similar level of annual investment.

"We are pleased to be able to accelerate this work now, while gas prices remain low.

"In addition to ensuring the continued safety and reliability of our gas system, the Gas System Modernization Program will enable us to create 500 direct, sustained jobs over the three-year period — providing an economic boost for New Jersey."

In 2017, the residential customers are expected to pay an increase of $0.49 on their average monthly bill for 1,010 therms usage annually and at the end of the program, approximately 1.5% will charged annually over four years.

PSE&G maintains more than 17,000 miles of gas distribution mains capable of transporting natural gas to 1.87 million customers.

Image: PSE&G plans to replace up to 510 miles of gas mains and 38,000 service lines in US. Photo: courtesy of bejim/