New Jersey’s Board of Public Utilities approved an agreement Monday for South Jersey Gas to provide natural gas to the B.L. England power plant, a significant step in converting the facility from coal and oil power.

The plant in Upper Township would easily become the provider’s largest single customer, using a projected 20 million dekatherms annually, or about the same amount needed to power 267,000 homes in a year, once it is fully online in 2016. The gas would be delivered through a 22-mile-long pipeline from Millville.

“The repowering of this station with natural gas assures the continued availability of this important asset and advances several goals of New Jersey’s Energy Master Plan, including the promotion of new, clean, in-state electric generation for power production and protecting our environment,” Jeffrey E. DuBois, president of South Jersey Gas, said in a statement.

Officials at both South Jersey Gas and plant owner RC Cape May Holdings, a subsidiary of Houston-based Rockland Capital, said Monday’s decision came after months of cooperation, negotiations and oversight from the state.

“We were very hopeful that everyone saw the benefits of the project and that those benefits outweighed any concerns that people have,” said Bob Rapenske, vice president of asset management for Rockland Capital.

Many steps remain in the process, as the companies need more approvals from the BPU, the state Department of Environmental Protection and the Pinelands Commission. Rockland Capital will participate in an auction next month to provide capacity to the PJM Interconnection electricity transmission system, and afterward it will seek financing for the $400 million conversion.

South Jersey Gas said it will spend $90 million to construct its new 24-inch diameter transmission pipeline to Beesleys Point. Construction for that is expected to begin by the end of the year.

Monday’s agreement specifically sets the monetary rate that South Jersey Gas will charge RC Cape May Holdings to transmit gas to the plant, said Steve Cocchi, director of rates and revenue requirements for South Jersey Gas. He said those figures are not made public.

The DEP and RC Cape May Holdings reached an agreement on the plan in June. The timeline laid out in that agreement includes shutting down one of the plant's two coal-fired units by the end of September.

While conversion should cut down dramatically on the pollutant emissions at the plant, as well as eliminate greenhouse gases associated with carrying fuel there by train and rail as is currently done, some environmentalists have called for the plant to be completely converted to renewable energy instead.

“Even though we sued to get B.L. England to stop using coal, we are concerned about the gas line,” said Jeff Tittel, director of the Sierra Club’s New Jersey Chapter, in a statement issued shortly after the BPU’s approval.

Tittel said he thought the facility should be converted to support offshore wind energy.

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