N.J. regulators approve settlement on Atlantic City Electric power grid upgrades

The first rate adjustment is not expected to occur before July 2018, the company said

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The New Jersey Board of Public Utilities approved a stipulation of settlement authorizing Exelon’s Atlantic City Electric to invest $79 million in a five-year capital investment plan to improve distribution grid resiliency under the company’s “PowerAhead” program.

ACE, in a separate May 31 statement, said that PowerAhead is a comprehensive plan to modernize the electric grid through enhancing system resiliency by addressing vulnerable areas on the electric system that have experienced extended outages during recent severe storms.

ACE in March 2016 filed a petition seeking approval to establish a $176 million PowerAhead program, the BPU said in its statement, noting that the petition also requested approval of an associated cost recovery mechanism to allow ACE to recover revenue associated with the resiliency program based upon the planned in-service date.

After two public hearings that were held in June 2016, the parties, which include ACE, the New Jersey Division of Rate Counsel, Environmental Defense Fund, and Unimin Corp., reached a stipulation of settlement, the BPU said. The parties agreed to an investment level of $79 million, and the associated recovery mechanism, the BPU said.

The BPU also noted that the specific PowerAhead investment areas and levels are:

· Structural and electrical hardening – $24 million

· Distribution automation – $15 million

· New substation – Harbor Beach – $14 million

· Barrier Island feeder ties – $13 million

· Selective undergrounding – $11 million

· Electronic fusing – $2 million

The BPU said that the agreed upon cost recovery mechanism allows rate recovery on a provisional basis of all expenditures related to facilities that have been placed in service. The associated costs will be subject to review by the BPU in ACE’s next base rate case, which is to be filed within three years, the BPU said.

“The board believes the cost recovery mechanism strikes a balance between the company’s need to earn a reasonable rate of return over the life of the investments while protecting ratepayers from paying more than reasonably necessary,” the BPU said. “Ratepayers will see no rate impact until an improvement project is placed in service.”

In its statement, ACE said that PowerAhead will result in gradual rate changes over the five years of the program as individual projects are completed and are serving customers. The PowerAhead distribution rate adjustment will result in a rate increase for a typical residential customer using 716 kWh per month of 49 cents, or 0.38 percent, upon completion of all projects after five years, ACE said. The first rate adjustment is not expected to occur before July 2018, the company said.

ACE also said that PowerAhead’s planned projects include increased system automation and remote control for faster and safer restoration, with that work entailing the rebuild of about 15.5 miles of distribution feeders to improve resiliency by installing 71 reclosers, automation devices on feeder lines that isolate outages and enable quicker restoration. In addition, the program will extend remote capability to an additional 90 stand-alone reclosers that will allow system personnel to identify a fault location and restore service to customers remotely in extreme weather conditions.

The company said that planned projects also include selective undergrounding upgrades to existing distribution feeders, as well as constructing system ties to the barrier islands from the mainland through upgrades and expansion of the distribution system to improve resiliency against extreme weather events. Furthermore, ACE said that planned projects include structural and electrical enhancements, including conductor upgrades and the replacement of single operations fuses with reusable electronic fuses intended to automatically restore service.

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