Two New Jersey LDCs decided they can make the most of theirunneeded upstream pipeline capacity by working together to bring itto the marketplace.

New Jersey Natural Gas (NJNG) and South Jersey Gas (SJG) formeda one-year alliance to release capacity to each other for moreeffective marketing of that capacity. For instance, South Jersey isa bigger player than New Jersey Natural on pipelines Columbia andTransco, while New Jersey Natural is a bigger player on Texas Gasand CNG. Under the arrangement, South Jersey will release itscontracts on Texas Gas and CNG to New Jersey Natural, and NewJersey Natural will release its Columbia and Transco capacity toSouth Jersey.

“Both companies possess capacity that the other company hasexpertise in managing,” said Jeff DuBois, South Jersey director ofgas supply and off-system sales. He said both LDCs have been activein the off-system and capacity-release market since FERC Order 636and called the alliance “a natural progression” of theseactivities. The partnership is expected to lower gas costs whileallowing both companies to retain control of their assets.

“Through this new partnership, we have combined the strengthsand experience of our two energy services business units and ourrespective 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 establishedindividually in the capacity release markets. Now we can extendthose gains by working together to capture benefits for ourcustomers and shareholders that neither NJNG nor SJG could havedone on our own.”

Under an incentive arrangement approved by the New Jersey Boardof Public Utilities, NJNG, SJG and other utilities share marginsfrom these capacity sales with customers and shareholders. Sincethe programs began in 1992, NJNG and SJG have credited a total ofmore than $104.4 million to their customers. The alliance isexpected to generate more benefits for customers and shareholders.

Joe Fisher, Houston

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