South Jersey Gas Customers Get Rate Cut after Hedging, Storage
A successful hedging strategy and the use of gas storage capacity paid off for South Jersey Gas, which announced plans to cut residential gas customer rates by 25 cents/Dth, while also providing a credit in March 2004 gas bills averaging about $89. The rate reduction, excluding the credit, will save customers about $16 during the remainder of 2004, the company said.
"Our hedging strategy has shielded our customers from price fluctuations in a volatile energy market," said CEO Edward Graham. "Our use of stored supplies of natural gas purchased at lower prices in 2003 in part makes the credit possible even while natural gas prices have significantly increased. The rate reduction we're proposing is based on our forecast of natural gas prices into 2005.
The combination of the rate reduction and bill credit represents an 11.4% annual savings for residential heating customers, the utility said. This action will replace the proposal South Jersey made in December 2003 to reduce customers' rates by 4.4% so they can benefit from an immediate 11.4% savings. In November 2004, SJG's customers will finish paying for a three-year gas cost underrecovery, which will result in an additional 4.4% reduction.
"The reduction and bill credit come at a critical time," said New Jersey Board of Public Utilities President Jeanne M. Fox. "Cold weather and increased gas prices are putting a strain on families so I applaud South Jersey Gas' effort to assist customers."
South Jersey passes through to customers the price it pays for its gas. South Jersey provides gas service to more than 300,000 residential, commercial and industrial customers in Atlantic, Cape May, Cumberland, Salem, and significant portions of Gloucester, Burlington and Camden counties in New Jersey.
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