PSEG estimates that the cost associated with the restoration of PSE&G's distribution and transmission system following the impact of Superstorm Sandy and the subsequent Nor'easter as approximately $250 - $300 million.
Superstorm Sandy left 1.7 million of PSEG's electric customers without power during the course of the storm and caused severe damage to the transmission and distribution system throughout its service territory as well as to some of its generation infrastructure in the northern part of New Jersey.
Superstorm Sandy's strong winds and heavy rainfall resulted in a storm surge that caused the Hudson, Hackensack and Passaic rivers to overflow causing damage to switching stations, substations and generating infrastructure.
Over the two-week period following the storm, including the Nor'easter, the utility restored power to more customers than in any other storm in its history. The utility brought in 1,000 out-of-state line workers and tree trimmers in preparation for the storm and that number grew to more than 4,000 at the height of the restoration. As part of the storm restoration process, approximately 48,000 trees were removed or trimmed and the utility replaced/repaired over 2,400 utility poles.
Crews have continued working to make repairs permanent and return the system to its normal design. At the same time, PSEG is analyzing the best ways to protect the system from this type of storm in the future.
The estimated cost of restoration of $250 - $300 million associated with Superstorm Sandy includes both expenses and capital related to the restoration, and the company expects at least 85% of those costs to be deferred or capitalized for future distribution or transmission recovery. The estimate does not include potential future costs to permanently repair PSE&G's damaged infrastructure or to modify the infrastructure to reduce the risk of damage of future storms.
PSEG continues to forecast operating earnings for 2012 of $2.25 - $2.50 per share. The forecast recognizes the impact of storm-related costs to be expensed at PSE&G. However, storm-related expenses at PSEG Power, which are still being assessed, will be treated as one-time in nature and excluded from operating earnings given the unusual nature of the storm on Power's operations. PSEG expects to provide investors with estimates for the costs at Power prior to the release of the company's fourth-quarter earnings.
The utility intends to seek recovery for insured property damage at both PSE&G and at PSEG Power, however, no assurances can be given relative to the timing or amount of such recovery.