Public Service Enterprise Group (NYSE: PEG ) announced today that it plans to spend $12 billion on capital projects over the next five years, with a special focus on transmission investments. The five-year capital program of $10 billion is a 20% increase over the prior five years. The additional investment is mostly going to fund mandated transmission upgrades to address projected system overloads and maintain reliability.
The utility made the announcement at its 2014 annual investor conference today, where PSE&G Chairman and CEO Ralph Izzo explained why his company is ramping up capital expenditures. According to the company, Izzo said:
The strategy we have put in place over the past several years is transforming the profile of our company. ... Transmission lines and switching stations are the backbone of our electric grid, ensuring that we can transport power to where it's needed safely and reliably.
Public Service Enterprise Group is part of Eastern grid organizer PJM, which has ordered all utilities in its area to upgrade their transmission systems to reduce overload and increase reliability. PSEG says it has five "major" projects under way, with an additional 345-kilovolt line expected to be up and running by 2018.
PSE&G says it plans to invest $6.8 billion in transmission projects over the next five years -- spending that it believes will help the utility reach double-digit earnings growth between 2013 and 2016.
"Companies have a choice in where to invest their capital," said PSE&G President and COO Ralph LaRossa in a statement. "We have chosen to invest our capital in upgrading and maintaining infrastructure that is critical to New Jersey's economic health -- and the more than 2 million electric and gas customers who rely on us to provide them with heat and light day in and day out."