Public Service Enterprise Group Inc.
) subsidiary Public Service Electric and Gas Company ("PSE&G")
received approval to build the North Central Reliability Project
("NCRP"), worth $300-$350 million, from the New Jersey Board of
Public Utilities ("BPU").
Under this project, Public Service Enterprise will upgrade 35
mile-long transmission lines and substations in New Jersey from
their existing capacity of 138,000-volt (138kV) to 230,000-volt
(230kV). These transmission lines stretch from the Roseland
Switching Station in Essex County to the West Orange Switching
Station in Essex County and to the Sewaren Switching Station in
The company will conduct this project on behalf of an
independent regional planning organization called PJM
Interconnection, L.L.C. to ensure better power supply and reduction
in transmission snags, thus maintaining reliability for New
Jersey's commercial and residential customers.
The Enterprise announced the NCRP project in March last year.
This project is a part of the $3.5 billion transmission upgrades
program, which the company is expected to invest over the next
several years to maintain its system reliability.
It is a normal practice for regulated utility providers to
invest substantial amounts for infrastructure development. The
company expects the demand for electricity in the region to
increase gradually in the near term. This project will enable the
company to provide customers safe and reliable services. We expect
that the company might file for a rate increase in the near future
to recover its infrastructural investments.
In addition, the project is expected to create about 6,500 jobs,
thus lowering the unemployment rate in the region. In the
long run, the company will cater to increased power demand, which
will contribute to its utility revenue generation.
We view Public Service Enterprise Group Inc. as an organization
with a strong portfolio of regulated and non-regulated utility
assets that offer a stable earnings base and substantial long-term
growth potential. Key growth drivers of the company include higher
levels of capital investment, hedging, a low-cost nuclear fleet,
assumed rate relief and additional generating capacities.
However, the increasing cost of coal, higher pension and
financial costs, and power-price volatility are areas of concern
for the company.
Public Service Enterprise Group Inc. currently retains a Zacks
#3 Rank, which translates into a short-term Hold rating.
Public Service Enterprise Group Inc., based in Newark, New
Jersey, is a diversified utility holding company. Its operations
are mostly located in the Northeastern and Mid-Atlantic parts of
the U.S. The company competes with
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