Dive Brief:
- Public Service Electric & Gas (PSE&G) has seen a significant increase in interconnection requests, rising to 4.7 GW from just 400 MW a year ago, as reported by Ralph LaRossa, the utility’s CEO.
- On average, these projects are around 100 MW, well within the capacity of PSE&G’s robust transmission system, as mentioned during the company’s recent earnings call.
- PSEG is also in negotiations with data centers interested in purchasing electricity directly from its nuclear power plants located in southern New Jersey, which have a total capacity of 2,483 MW.
Dive Insight:
PSEG is well-positioned as it heads into 2025, according to analysts from Guggenheim Securities. They highlighted the utility’s promising earnings potential from data center agreements, increased demand in the PJM region, and a favorable regulatory climate, all without needing to raise equity funding during a significant growth period.
However, there are concerns regarding the PJM Interconnection’s capacity market, which is facing uncertainty. LaRossa expressed doubts about its future viability, emphasizing the need for reliable power supply mechanisms as varying states look for alternatives.
He highlighted New Jersey’s challenges, stating that there are no clear solutions as stakeholders navigate the best path forward. Another pressing issue is customer affordability; New Jersey’s recent capacity auction results indicate a 17.2% increase in electric bills for PSE&G’s residential customers starting June 1.
Discussions about colocation rules with the Federal Energy Regulatory Commission have not deterred interest from potential customers, indicating they recognize the importance of prompt action, even amidst ongoing uncertainties.
PSEG plans to raise its capital spending from $22.5 billion to $26 billion for the 2025 to 2029 period. This increase is part of a strategy to fund modernization and handle load growth. The utility expects that all required funds will be sourced from internal resources and debt.
In light of these investments, PSEG forecasts a 6% to 7.5% annual growth rate in its rate base over the next five years. The company also revealed a drop in income to $1.8 billion in 2024 from $2.7 billion the previous year, with revenue falling to $10.3 billion.