UPDATE: NJ Regulators Delay Decision on PSEG Transmission Line

New Jersey regulators voted Friday to delay for up to 30 days their decision on a high-voltage power line proposed by a unit of Public Service Enterprise Group Inc. (PEG).

New Jersey's largest utility has been planning the transmission project for two years, saying it will relieve stress on existing lines, improve reliability and provide access to lower-cost power. But the timetable for what's known as the Susquehanna-Roseland project has come into question, as other projects in the 13-state PJM Interconnection power market, which includes New Jersey, have been put on hold in recent weeks.

The New Jersey Board of Public Utilities said that in light of the other delays, it will hold off on its decision and request a further review from PJM. The grid operator, in a short letter to regulators this week, said the New Jersey project is still needed and isn't affected by the delays of other projects.

"We should seek and receive further detailed confirmation from PJM," said Commissioner Joseph Fiordaliso, before the board voted unanimously for the delay.

The $750-million, 45-mile project planned by Public Service Electric & Gas, which is a unit of Public Service Enterprise Group, would run from northern New Jersey into Pennsylvania. PSE&G could earn up to a 12.9% return on its equity investment in the project, which is scheduled to be operational in the summer of 2012.

In a statement, a spokeswoman for PSE&G said the utility is disappointed with the delay and considering its options to ensure reliable service for its customers.

PSE&G is partnering on the transmission project with PPL Corp. (PPL), which would build the $510 million Pennsylvania portion of the line. PPL won the backing of state regulators there Thursday.

But slumping power demand driven by the recession and conservation and curtailment programs is causing utilities and regulators to reconsider the schedule for transmission projects. Although expected to rebound this year, power demand declined in 2008 and 2009, with last year's drop being the largest in more than 70 years.

In recent weeks, Allegheny Energy Inc. (AYE) and American Electric Power Co. (AEP) said they plan to delay a $1.8 billion transmission line from West Virginia to Maryland because of a less-robust outlook for power demand. Pepco Holdings Inc. (POM) followed by asking Maryland regulators last week to suspend a review of a $1.2 billion transmission line through Maryland. The companies will await a study of regional transmission needs expected from PJM in late June.

Public Service Enterprise Group shares were at $32.32, down 50 cents, or 1.5%, in recent trading.

-By Mark Peters, Dow Jones Newswires; 212-416-2457 mark.peters@dowjones.com

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