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New PSEG Long Island plan to reduce energy use proposes LIPA invest $330 million

PSEG Long Island lineman Dave Roslak, of Holtsville,

PSEG Long Island lineman Dave Roslak, of Holtsville, works to transfer power lines to new utility poles along Route 347 in Nesconset on July 10, 2014. Credit: Newsday / John Paraskevas

An updated PSEG Long Island plan for reducing power demand during peak periods proposes that LIPA finance $330 million to help reduce the need to construct a more costly power plant.

In a filing late Monday, PSEG said it was proposing spending $345 million, compared with its original $215 million, at the request of ratepayers who asked for more clean energy initiatives at Department of Public Service hearings on the plan in August.

The state department worked closely with PSEG to revise the plan, called Utility 2.0. Previously, PSEG proposed to lend LIPA $200 million to finance the plan.

The public hearings showed local ratepayers "are eager to improve the electric system by moving toward a cleaner, resilient and more distributed system that will result in reduced peak load, reduced pollution and lower total customer costs," said Julia Bovey, director of the local DPS office.

The amended plan has PSEG increasing the targeted reduction to 250 megawatts from an initial 185 megawatts. One megawatt powers about 800 homes.

The revised plan would rely on funding from the Long Island Power Authority, which has the ability to borrow at considerably lower rates than the roughly 10 percent to 12 percent that PSEG had planned to lend at. PSEG won't start collecting money from ratepayers for two years, when a rate freeze that is part of Gov. Andrew M. Cuomo's LIPA reform expires.

PSEG plans to spend the $345 million, including at least $15 million of its own money, over four years, starting next year and continuing through 2018.

Savings from the plan are expected to offset its costs, according to the plan. If it meets its objective of eliminating 250 megawatts of demand, Utility 2.0 could make construction of a new power plant unnecessary.

The original Caithness facility in Yaphank, which provides LIPA with 255 megawatts of peak summer capacity, has a 20-year contract valued at more than $1.67 billion.

Peter Gollon, energy chair of the Sierra Club's Long Island chapter, called the revised plan "much improved" over the first iteration and urged PSEG to enact the measures as soon as possible.

The plan doesn't include the cost of burying controversial power lines in East Hampton, something East Hampton residents overwhelmingly requested. Resident Lynne Brown said she was "extremely disappointed" that the project, which left high power transmission on taller, fatter poles, wasn't covered.

"It's not really part of the plan," explained Mike Voltz, director for energy efficiency and renewables at PSEG, saying demand reduction and distributed energy were the primary aims of Utility 2.0.

In addition to earning a return on its solar and battery investments, PSEG would earn an incentive on the projects based on "shared savings potential," Voltz said. "If we save future generation and fuel, whatever the cost savings would be, we'd share equally with the customers," Voltz said.

PSEG will hold a public hearing about the Utility 2.0 plan at 10 a.m. Tuesday in the Nassau legislative chamber in Mineola.

WHAT REVISED PLAN INCLUDES

-- An expansion of a project to install remote-controllable central air conditioning thermostats and pool pumps, to $106 million from a previous $60 million, with an expected annual savings of 125 megawatts vs. 100 megawatts.

-- Proposed spending of $1 million for electric vehicle charging stations.

-- $25 million for smart meters for 50,000 customers, including industrial/commercial accounts and consumers with billing complications or hard-to-access meters.

-- PSEG investments in "utility-scale" solar projects producing a total of 20 megawatts. The cost was not released.

-- A PSEG-owned and -operated large battery storage system on the South Fork, with PSEG investing $15 million.

-- A sweeping expansion of a program to reduce energy use in Far Rockaway, funded at $76 million compared with the $13 million proposed previously. The plan calls for "market-based" alternatives to reduce demand and install efficient new power sources in the region.

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