PJM OKs $1.8 Billion In Transmission Upgrades, Replaces Related Plan

The largest U.S. power marketer said Wednesday it had approved $1.8 billion in upgrades to transmission lines in northern New Jersey, replacing a proposal to build new lines due to ongoing controversy about a related project.

PJM Interconnection's board Wednesday authorized $1.1 billion in transmission-line upgrades and $700 million on projects to improve infrastructure connecting power plants, merchant power lines and the PJM power grid.

The board shelved a proposal that would have built a 500-kilovolt transmission line connecting three substations in New Jersey. Instead, PJM authorized upgrades to existing lines and the installation of two new 230-kV underground lines. A unit of Newark-based Public Service Enterprise Group Inc. (PEG), with authority over the now-defunct 500-kV project, will oversee the new proposal.

"Our annual re-evaluation showed that, for this particular project, changes in demand growth and demand response reduced the number of expected overloads and that alternative upgrades could resolve the remaining problems," said Michael J. Kormos, PJM's senior vice president of operations, in a statement.

The new proposal will cost an estimated $700 million, while the original project was projected to cost $1.08 billion, said PJM spokeswoman Paula DuPont-Kidd.

The decision comes as a related PSEG project to build a 45-mile stretch of 500-kV line connecting transmission lines in northeastern Pennsylvania with a power hub in northern New Jersey has stalled as organizers reconsider the line's route due to challenges from environmental groups. The Susquehanna-Roseland Project was approved by the New Jersey Board of Public Utilities in February, but it faces stiff opposition from groups who say that the line will obstruct recreation areas and otherwise harm state and national parkland.

PSEG has said the improvements are necessary to ensure reliable delivery of electricity to the New York metropolitan area, and that existing transmission circuits could be overloaded, potentially leading to brownouts or blackouts. Should the plan advance on schedule, the first portions of the line are expected to come online in 2014. PPL Corp. (PPL) is building the Pennsylvania portion of the line.

PJM's DuPont-Kidd said the transmission-line upgrades approved Wednesday were made under the assumption that the Susquehanna-Roseland project would be completed as planned. "The line is still needed and called for," she said.

PJM oversees the power grid in 13 states and Washington, D.C., serving more than 51 million people.

-By Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

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