PSEG Leaving Retail Electricity Supply Business

Posted on Posted in Camden electricity, PSEG, Save Money
Nuke plants struggling, PSEG pulls the plug on its commercial retail electricity business.
Its three New Jersey nuclear plants struggling, PSEG decided to wind down its retail electricity business to commerical customers.

Why did PSEG drop its retail supply operation?

After just 2 years, Public Service Enterprise Group  (PSEG) has made the decision to withdraw from the New Jersey retail electricity marketplace. This represents a shift in priority for its parent company, PSEG Power, which owns around 18 MW of power-generating capacity. The business has been reasonably successful, according to top executives. So why is it dropping out of the market?

Why did PSEG start up Energy Solutions?

In order to understand why they’re leaving the marketplace, we should first take a look at why they entered it in the first place. They weren’t seeking big profits – instead, they were looking to diversify. The parent company’s managing director, Tom Chamberlin, said in 2016 that their intention was “to help hedge the power portfolio”. Chairman, CEO and president Ralph Izzo also framed the move as a defensive one, saying that it was “not a significant growth opportunity by any stretch of the imagination”. It’s easy to see why – cheap New Jersey electricity ratesare available all over the state, making this market very competitive.

What’s Changed since then?

Given that PSEG wasn’t expecting to make any money from their move, why have they decided to pull out now? The reason appears to lie with changes in the market. PSEG draws a great deal of its power capacity from its three New Jersey nuclear plants, Hope Creek, Salem I, and Salem II that are operated by its subsidiary, PSEG Power. With fracking providing abundant and cheap natural gas,driving cheap New Jersey electricity rates, PSEG was under pressure to diversify.

 In PSEG’s press release, they state that “[PSEG] has concluded that retail electric marketing will not provide a material enhancement to its hedging activity”. It sounds like although they were only hoping to backstop their other business areas, there isn’t enough room to grow within thecurrent New Jersey retail electricity market.

How will this affect my New Jersey electricity rates?

PSEG Energy Solutions sold electricity to businesses, not to residential customers. Since that business was separate from the PSEG parent company, residential customers will not see any difference in their monthly utility bills. Of course, there are continued concerns over the ongoing difficulties that PSEG Power’s nuclear generators have with their ability to compete with cheap natural gas.

 Although PSEG Power’s nuclear capacity could conceivably be replaced by natural gas plants and renewables, it would take a lot of investment to make this happen. As PSEG struggles to make ends meet, though, it’s not inconceivable that they might end up scaling back in other areas, too. They’ve struggled to pay for the operating costs of their nuclear plants, and have made it clear that if nuclear plants don’t generate profits, PSEG won’t keep running them.

Should I be worried about rising bills?

Although this latest development isn’t cause for concern in itself, it’s never too early to shop for a cheap fixed-rate electricity deal in New Jersey. If you lock in a long deal now, you could be protected for years to come even if rates do rise. It’s a great idea to shop around, so make sure you visit save big on your monthly bills.

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