Public Service Energy Group marked a number of “wins” that show how the company is aligned with New Jersey’s energy policies, including the sale of its portion of the state’s first offshore wind project, CEO Ralph LaRossa said during a second-quarter earnings call Tuesday.

LaRossa said the sale of its 25% share of Ocean Wind 1, which closed at the end of May, and other initiatives underway reflect what he sought to do in assembling his management team over the past six months and keeping the utility in line with the New Jersey’s aggressive clean energy initiatives. He became PSEG’s CEO in September.

LaRossa said he was “very proud” of how the company exited from the offshore wind business.

“We entered, we took a hard look at that opportunity, and we exited in a way that both we were able to keep our heads up financially, policy-wise and with the labor workforce in the state of New Jersey,” he said.

LaRossa said in February that the company would leave offshore generation due to its unpredictability but would be “keeping an eye on the market and [seeing] what makes sense.” (See PSEG CEO Says Need for ‘Predictability’ Drives OSW Sale.)

Ørsted and other OSW developers have in recent months expressed concern about the rising cost of completing projects due to general inflation, elevated costs for raw materials and transportation and rising interest rates. They also say they cannot execute projects under previously agreed financing deals. (See OSW Industry Group Sees Growth Beyond Turbulence.)

Reflecting NJ Policy

LaRossa said another big “win” was the New Jersey Board of Public Utilities’ (BPU) July 26 approval of the three-year Triennium 2 energy efficiency plan. (See NJ BPU Backs Building Decarbonization Plan Despite Opposition.)

Central to the BPU’s plan is a series of building decarbonization (BD) “startup” program plans designed to encourage customers of all kinds — but especially residential and multifamily-dwelling customers — to switch from fossil fuel water and space heaters to electric appliances. Another part of the plan details a package of demand response proposals under which customers would reduce their energy use in response to different circumstances. The proposal puts much of the responsibility for enacting the proposals on the state’s four utilities.

Parts of the BPU package are similar to existing PSEG energy efficiency measures, and other parts reflect the company’s own vision, LaRossa said.  He noted that the BPU in May approved a $280 million, nine-month extension for one of the utility’s energy efficiency programs that would put it in synch with the start of the Triennium plan in June 2024.

“We stayed aligned with public policy on our energy efficiency filing and [that] took us a good step forward,” he said. “As a result of that, we’ll really be able to take some advantage of some new orders that came out from the board.”

He described the BPU plan as “a good roadmap for all the utilities in New Jersey to follow” and said PSEG is “still studying” the proposals.

“That has a lot of upside for us,” he said. “We think [it] will really encourage additional energy efficiency investments from companies like ours,” he said.

Advocating for Electrification

LaRossa noted that Kim Hanemann, president of the company’s PSE&G New Jersey utility subsidiary, is “already actively involved” in the clean buildings working group assembled by Gov. Phil Murphy (D) to study how best to advance electrification in the state. The group “is considering various approaches to building electrification, including the development of a clean heat standard,” he said.

“Our overall approach to energy transition is to continue advocating for practical expansion of electrification in a manner which protects customer affordability, safety and reliability,” he said.

The approach also includes improving the efficiency of the utility’s gas operations, LaRossa said. The company in the first quarter submitted to the BPU a system modernization program that aims to improve the efficiency of its gas system. The plan aims to cut methane leaks by 22%, part of an effort to cut methane emissions by 60% between 2011 and 2030, he said.

He said the various initiatives contributed to a “relatively straightforward quarter” in which the company focused on executing its plans for growth, and “also increasing the predictability of our business.”

PSEG reported second-quarter net income of $591 million, ($1.18/share) compared to net income of $131 million, ($0.26/share) for the second quarter of 2022. Non-GAAP operating earnings for the second quarter were $351 million ($0.70/share) compared with non-GAAP earnings of $320 million ($0.64/share).