PSEG Power Announces Plans for 400MW of New Peaking Capacity

PSEG Power, a wholly owned subsidiary of Public Service Enterprise Group, announced today that it has initiated with PJM the planning required for construction of up to 400 megawatts (MW) of new gas-fired peaking capacity. Depending on the timing and outcome of the process, PSEG Power intends to bid this capacity into PJM’s Reliability Pricing Model (RPM) Base Residual Auctions in 2008 for supply beginning as early as 2010.

William Levis, president of PSEG Power, said, “The RPM auction process is working well. The pricing provided by the auctions held in 2007 provides sufficient return to support an expansion of PSEG Power’s investment in new peaking capacity. The auction pricing also has increased our focus on the operating performance of our reliability based units, resulting in lower forced outage rates at PSEG Power’s existing fleet.”

PJM received FERC approval for the RPM process in December 2006 and initiated the new auction process in early 2007. RPM has been successful in providing the market with greater clarity around the value of investments in new and existing capacity to meet reliability requirements.

PSEG Power has requested that PJM perform a feasibility study to determine its ability to add up to a total of 1000 MW of new gas-fired capacity at some of its existing generating stations located in the Eastern MAAC reliability region.

The study is the first step in the process to determine the feasibility of adding the new generation capacity. Levis said the cost to build the new capacity that would be available to bid into the 2008 RPM auctions (300-400 MW) could be in the range of $250-$350 million. He added that “the final decision to proceed with construction would take into account capital and interconnection-costs, available siting and the impact of any potential environmental permitting restrictions.”

“The new capacity,” Levis said, “will complement PSEG Power’s existing fleet of 13,600 MW, improve the overall efficiency of the fleet, and enhance reliability, in particular for New Jersey customers, where PJM indicates additional energy supply is needed.”