New Jersey State Assembly Committee on Telecommunications and Utilities - February 8, 2007 NEWARK, N.J., Feb. 8 /PRNewswire-FirstCall/ -- I am Ralph Izzo, president and chief operating officer of Public Service Enterprise Group. Thank you, Chairman Chivukula, and members of the Committee for the opportunity to testify this morning. And, in the hope of perhaps being invited back, I will keep my comments brief. The question of how best to insure that New Jersey continues to be served by reliable, affordable, safe, and environmentally sustainable energy supplies is of critical importance. PSEG is in its second century of helping to answer this question. The men and women who have made PSEG one of the state's leading corporate citizens and the most reliable energy company in the nation remain absolutely committed to the task of helping our State meet the considerable challenges ahead. I want to provide the Committee today with an outline of how I think PSEG can best contribute to helping New Jersey meet its energy objectives but before doing so, I'd like to offer some general comments: * First, PSEG supports the goals set forth by Governor Corzine in his Energy Master Plan directive. However, we recognize there are no "silver bullets" to achieve those goals. An integrated approach -- which includes energy efficiency, distributed renewable resources, and central station power -- is needed. * Second, any discussion of an energy policy must include the effects on climate change. PSEG believes climate change and the reduction of greenhouse gases that contribute to the phenomenon represent the fundamental environmental challenge of our time. We strongly support action on a national level to implement mandatory and meaningful reductions in carbon dioxide and other greenhouse gas emissions associated with our industry and the economy at large. We also encourage policymakers in New Jersey to consider carefully the areas where they can produce the greatest positive impact. Clearly, NJ can influence retail energy customers -- for example, through conservation programs -- to reduce energy consumption and associated greenhouse gas emissions. However, the likely outcome of New Jersey imposing carbon emission controls on electric generating facilities unilaterally or in the context of the Regional Greenhouse Gas Initiative will be to raise energy costs here, impair the competitiveness of our economy, and shift the generation of electricity to more carbon- intensive and heavier-polluting facilities located outside of the region with no environmental benefit at all. * Third, competitive electricity markets, including the wholesale markets operated by PJM and the Basic Generation Service auction operated by the NJ BPU, continue to provide real, tangible benefits to the state's economy and energy consumers. The BGS auction in which the state's electric distribution utilities procure the energy and capacity with which to serve customers is a highly competitive process that has helped mitigate the impact of volatile world energy prices on New Jersey consumers. * Fourth, New Jersey is linked to an interstate electric and gas transmission network. The PJM Interconnection coordinates supply and transmission of bulk power and administers wholesale markets in 12 states and the District of Columbia. The Federal Energy Regulatory Commission has jurisdiction over wholesale power, transmission and natural gas pipelines. The U.S. Congress and the White House will chart the nation's overall course on energy policy, environmental policy, and climate policy. It is absolutely essential that New Jersey policymakers be engaged at all of these venues -- at PJM, at FERC, and on Capitol Hill. Now, let me answer the question -- how can PSEG help? We want to be engaged as an investor in and provider of the key services required to meet New Jersey's energy and environmental goals and ensure the ongoing reliability of the electric system. For over 100 years we have invested in the future of the State. It is time to unleash our expertise and leverage our relationship with customers and our access to capital to create meaningful, integrated energy solutions -- energy efficiency, demand side management, distributed renewable resources, and central station electric power generation, in particular, nuclear power. PSEG's role should not be limited to the traditional functions of power generation and energy delivery. In our view, the state's utilities are uniquely positioned to invest in technologies, such as advanced metering infrastructure, that would enable and empower customers to achieve efficiency gains on a large scale. We also think utilities should be involved in financing efficient equipment on the customer side of the meter. Utilities have the brand recognition and, as noted, relationships with customers. And perhaps more important, utilities also have the ability to deploy "patient capital." By this I mean the ability to make long-term investments that serve the public interest, as long as there are assurances of earning reasonable returns on these investments. This will require implementing innovative ratemaking policies that would support our ability to commit capital to these kinds of initiatives. As part of the energy master plan process, we've proposed that utilities install advanced metering infrastructure for all electric and gas customers. This technology would enable customers to interact with energy suppliers in real time and take advantage of new pricing and energy management services. This kind of technology investment would be a logical extension of a pilot program we now have under way called "MyPower Connection." MyPower automatically adjusts central air conditioning units in response to electricity price changes and provides customers access to time-of-use pricing plans and additional information on how to manage energy consumption. With respect to renewable electricity supply, we've developed a strategy, called "Green Towns" that would facilitate large-scale solar photovoltaic installations at municipal properties through a partnership involving the state's utilities, state agencies, municipal governments, and the state's solar contracting industry. We think this program has the potential to develop significant amounts of solar power by 2020, and help reduce energy bills for local government, county and state, and school districts thereby easing property tax burdens as well. However, I must be candid in that these technologies will cost considerably more than other supply options for the foreseeable future. Let me repeat, an integrated approach should favor efficiency and renewables but these resources will not be enough. PSEG strongly believes an essential task for our company, the energy industry, and state policymakers is to maintain the reliability of our electric system. This will require developing new power plants in New Jersey. There are, however, some major issues to be considered. While there are a number of pilot projects under way and the U.S. Department of Energy is evaluating carbon capture technologies, there currently is no commercially available technology to control carbon emissions from conventional fossil-fueled power plants. New clean coal technologies such as integrated gasification-combined cycle (IGCC) are still on the cusp of commercial and technical viability. And developing this technology in the context of the current structure of wholesale markets presents very significant risks for merchant energy suppliers. Nuclear power is a proven, emissions-free electric generation technology that is available. But nuclear power has its own set of risks: siting issues, the unresolved issue of spent fuel storage, and an exceptionally long licensing and construction timeframe. However, any plan for a carbon-constrained future must include the benefits of nuclear power. PSEG stands ready to work with NJ to develop the infrastructure that enables energy efficiency as the first choice for consumers and businesses, that implements renewable supplies for customers who will benefit the most, and that ensures a long-term foundation of reliable, carbon-friendly, central station power, especially nuclear. Thank you for your time and for the opportunity to appear before the Committee. I would be happy to respond to questions. DATASOURCE: Public Service Enterprise Group CONTACT: Paul Rosengren, +1-973-430-5911 Web site: http://www.pseg.com/

Copyright