Pennsylvania

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PSEG Power could pull out of PennEast pipeline project

In this April 17, 2014 photo, workers construct a gas pipeline in Harmony, Pa.

Keith Srakocic / AP Photo

In this April 17, 2014 photo, workers construct a gas pipeline in Harmony, Pa. In a new development over the planned PennEast pipeline in the eastern part of the state, PSEG Power may sell its share.

This story is from our partner NJ Spotlight.

PSEG Power is exploring a sale of its share of the PennEast pipeline, a 118-mile project that has stirred widespread opposition in both New Jersey and Pennsylvania and encountered numerous regulatory setbacks.

A spokesman for the Newark company acknowledged the discussions, saying it is considering sale of its share—believed to be in excess of $100 million—but said it will continue to be a customer of the pipeline when it is built.

“We’ve decided to focus on our core business—managing and running a diverse fleet of power plants and construction of three new combined cycle (natural gas) plants,’’ said Michael Jennings.

But news of the decision elated opponents of the project, who have battled the proposal at the local, state and federal levels every step of the way, delaying regulatory and permit approvals in numerous cases.

“It’s New Jersey’s largest utility; if they are having doubts about the project, it is not a positive development,’’ said Tom Gilbert, campaign director  of Rethink New Jersey, a vocal foe of the proposal. “It is more evidence that the pipeline is in trouble.’’

PSEG Power is one of three New Jersey partners in the project, which begins in Luzerne County, Pa., would cross under the Delaware River and end in Mercer County near Trenton. Its route through many well-heeled suburban communities in Hunterdon and Mercer counties in New Jersey, as well as traversing public spaces and preserved farmlands has met enormous opposition.

For some time now, there have been rumors floating in Trenton and elsewhere PSEG would exit the project. That speculation was fueled during a routine question-and-answer period at the parent company’s annual investor’s conference in New York on Monday.

William Levis, the president and chief operating officer of PSEG owner, was asked by an analyst why an expenditure of more than $100 million for the PennEast project, was omitted from this year’s presentation, after appearing in earlier reports. Levis dodged the question, refusing to add any details.

Initially, the company refused to answer questions about the discrepancy, only answering it is exploring a sale early yesterday evening. Pat Kornick, a spokeswoman for Penn East, downplayed the significance of the announcement.

“That’s a very typical transaction in this business,’’ said Kornick, while noting PSEG Power would remain a customer of the pipeline, which would deliver low-priced natural gas to its power plants. Even if the company sells its share, it will remain a customer of the project, demonstrating the need for the project, she said.

Whether the project is necessary is one of the chief points of dispute in consideration of the project. The pipeline is one of about a dozen or so either pending in New Jersey or already approved. New Jersey’s Division of Rate Council has submitted testimony, arguing the developer has failed to prove the project is necessary, an argument repeated by opponents.

“We believe the pipeline will be built,’’ Jennings said. “We believe it will provide greater reliability and low-cost natural gas.’’

Many business interests share that view. So does the Christie administration, which has overhauled the state’s energy master plan with a primary focus on building out the energy infrastructure in New Jersey, a goal it has partially realized. For consumers, it has meant lower heating costs in the past several winters, with bills in Public Service Electric & Gas territory dropping 28 percent for typical homeowners the last few years.

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