New Jersey LDCs Team Up to Market Pipe Capacity
Two New Jersey LDCs decided they can make the most of their
unneeded upstream pipeline capacity by working together to bring it
to the marketplace.
New Jersey Natural Gas (NJNG) and South Jersey Gas (SJG) formed
a one-year alliance to release capacity to each other for more
effective marketing of that capacity. For instance, South Jersey is
a bigger player than New Jersey Natural on pipelines Columbia and
Transco, while New Jersey Natural is a bigger player on Texas Gas
and CNG. Under the arrangement, South Jersey will release its
contracts on Texas Gas and CNG to New Jersey Natural, and New
Jersey Natural will release its Columbia and Transco capacity to
"Both companies possess capacity that the other company has
expertise in managing," said Jeff DuBois, South Jersey director of
gas supply and off-system sales. He said both LDCs have been active
in the off-system and capacity-release market since FERC Order 636
and called the alliance "a natural progression" of these
activities. The partnership is expected to lower gas costs while
allowing both companies to retain control of their assets.
"Through this new partnership, we have combined the strengths
and experience of our two energy services business units and our
respective pipeline capacity portfolios for our mutual benefit,"
said Laurence M. Downes, NJNG CEO. Charles Biscieglia, SJG CEO,
said, "We're building on strong positions we've already established
individually in the capacity release markets. Now we can extend
those gains by working together to capture benefits for our
customers and shareholders that neither NJNG nor SJG could have
done on our own."
Under an incentive arrangement approved by the New Jersey Board
of Public Utilities, NJNG, SJG and other utilities share margins
from these capacity sales with customers and shareholders. Since
the programs began in 1992, NJNG and SJG have credited a total of
more than $104.4 million to their customers. The alliance is
expected to generate more benefits for customers and shareholders.
Joe Fisher, Houston
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