Public Service Electric & Gas Co. plans to spend $888 million over the next two years on energy infrastructure and efficiency and environmental programs, creating about 1,700 jobs in New Jersey.

In a filing with the state Board of Public Utilities, New Jersey's largest utility, a unit of Public Service Enterprise Group Inc. (PEG), is seeking approval of $698 million in accelerated investments in electric and gas distribution system capital projects. PSE&G plans to recover the cost through an annual adjustment to electric and gas rates of not more than 1%.

A second filing seeks approval for PSE&G to spend $190 million more to encourage conservation and create green jobs.

The company asked for approval by April 1.

"PSE&G's proposals are in direct response to [New Jersey] Gov. Jon Corzine's call for utilities to invigorate the economy," said PSE&G Chief Operating Officer Ralph LaRossa.

LaRossa said the utility will try to use local suppliers and contractors for the programs.

The plan would increase total capital spending, which was forecast at about $1.55 billion this year for the parent company. Public Service Enterprise Group had cut its capital spending outlook by $275 million to $325 million last fall in response to financial market volatility.

A spokeswoman said the company expects to update its total capital spending forecast, including the impact of the new plan, when it reports earnings next month. The company will raise additional capital for the new projects, but doesn't plan to issue new stock.

The company is seeking from regulators an allowed return of 10.3% for the projects.

Under the $698 million program, PSE&G would spend $406 million to improve electric systems and $292 million on gas systems in the next two years. Planned are $62 million for replacing street lights and efficiency improvements at PSE&G facilities; replacement of aged underground cable facilities, network transformers and relays; and upgrading of overhead wire, cable and transformers.

Gas-infrastructure investments include replacing and reinforcing aging gas cast-iron and bare-steel mains and services, purchasing specialized construction equipment, and upgrading meter and regulator stations. Less-efficient mercury-vapor municipal street lighting would be replaced with more-efficient induction-fluorescent lighting.

The $190 million would expand programs, approved by the BPU last year, to provide energy- and money-saving measures directly to families and businesses. These include free energy audits to identify ways to become more energy-efficient and funding for new technologies and demonstration projects.

Public Service Enterprise Group shares closed Thursday at $30.48, down 26 cents, or 0.85.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com

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