NEW YORK A unit of New Jersey power company Public Service Enterprise Group Inc said on Tuesday it would ask the state's regulators for approval to invest up to $883 million for an expansion of the utility's solar power programs.
The additional funds will allow the solar programs to develop an extra 233 megawatts (MW) of solar capacity, the company said in a release.
"When added to the company's existing $700 million commitment to solar energy, (PSEG) will have added about 395 MW of solar capacity in (New Jersey)," Caroline Dorsa, PSEG executive vice president and chief financial officer, said on the company's second-quarter earnings call.
The expansion would create about 300 direct jobs annually over the next five years, the company said.
When PSEG's current Solar 4 All program is complete early next year, the company said its Public Service Electric and Gas (PSE&G) subsidiary would have created about 175 direct jobs each year for the last three years and spent $300 million to develop 80 MW of solar capacity.
PSE&G's new solar proposal calls for investing up to $690 million to develop another 136 MW through its Solar 4 All program to build more projects.
The company was also seeking to spend up to $193 million more to help develop another 97 MW through a third installment of its solar loan program.
PSEG said the solar loan program has already made $177 million of financing available through mid-July 2012 that helped homeowners and businesses develop 55 MW of solar capacity.
New Jersey ranks second in the United States in installed solar capacity with 775 MW, according to the Solar Energy Industries Association (SEIA).
California has more solar power than any other state in the country with about 2,025 MW installed as of the first quarter of 2012, according to SEIA.
Dorsa said PSEG's Power unit cleared about 9,000 MW of capacity at $167 per megawatt-day for PJM's 2015-2016 capacity auction.
PJM operates the power grid serving more than 60 million people in 13 U.S. Mid-Atlantic and Midwest states and the District of Columbia.
Dorsa said efforts to improve PJM's minimum offer price rule (MOPR) prior to the next auction were ongoing.
PSEG wants the minimum offer price rule improved to prevent other generators from taking out-of-market state subsidies to build new power plants. The company has said those subsidies would depress the price of capacity that existing generators such as PSEG could get for their power plants.
Two combined-cycle, natural gas-fired plants received capacity subsidies from New Jersey and cleared the PJM auction -- oil company Hess Corp's proposed Newark facility and Maryland-based private power generator Competitive Power Ventures' proposed Woodbridge facility.
In response to a question about the minimum offer price rule, Dorsa said a court case was ongoing on PSEG's complaint against New Jersey's capacity subsidy. She could not say more about the complaint as the court was hearing oral arguments on the case at the time of the earnings call.
Separately, Dorsa said production from PSEG Power's natural gas-fired, combined-cycle fleet increased by about 10 percent in the second quarter.
She said 270 MW of new natural gas peaking capacity entered service on June 1 at Carney in New Jersey and another 130 MW of peaking capacity in New Haven, Connecticut was brought on line for the summer.
In the second quarter, Dorsa said, the dual-fueled Hudson and Mercer coal- and gas-fired plants in New Jersey ran mostly on gas. But, she said, the units were burning coal in July as gas prices increased.
Natural gas futures at the Henry Hub were trading at about $3.20 per million British thermal units (mmBtu) on the New York Mercantile Exchange (NYMEX) on Tuesday, up almost 70 percent from lows seen in April.
Dorsa said gas prices would need to improve by another $1.50 to $2 per mmBtu for coal to be competitive with the dispatch economics of the company's combined-cycle gas plants.
She said about 70 percent to 75 percent of PSEG Power's generation was hedged at an average price of $58 per megawatt hour (MWh) for the rest of 2012, about 55 percent to 60 percent was hedged at about $54 for 2013, and about 25 percent to 30 percent was hedged at about $54 for 2014.
(Editing by Dale Hudson and Maureen Bavdek)