New Jersey Approves Gas Rate Hikes For Three Utilities
Siding with New Jersey Ratepayer Advocate Blossom Peretz's
pleadings for moderation, the New Jersey Board of Public Utilities
(BPU) at a special meeting last week granted provisional approval
to three utilities for minimum requested rate increases that would
pass on the rising commodity cost of natural gas.
New Jersey Natural Gas (NJNG) received the 16% rate hike it
petitioned for, but Elizabethtown Gas (ETG) and Public Service
Electric and Gas Co. (PSE&G) received far less than requested.
"A rate increase is never a happy event for ratepayers, but we
saw a lot of mitigation in here that could help ratepayers get
through this crisis," said Peretz. The rates will become effective
as soon as the board signs a formal order, which is expected by the
end of the week.
The special meeting was in response to applications filed by
four utilities in an attempt to get the board moving quickly on
previously-filed rate increase proposals. Because of
differentiating rate term periods, last week's meeting only
involved the rate increase proposals of NJNG, ETG and PSE&G.
South Jersey Gas' rate term begins on Nov. 1, so the BPU will hear
its case at a later date.
In its rate hike petition, ETG requested a 17.3 to 30% increase,
but the board only approved the 17.3% hike. Likewise, PSE&G
wanted 24%, but instead only received 16%. ETG and PSE&G
updated their initial requests of 18% and 13% respectively after
gas costs went up over 50% after they filed. "There were filings
made some months back, and since that time there have been
increases above and beyond what the companies' had sought," said
ETG spokesman George Koodray.
Starting in December 2000 and going through April 2001, the gas
companies may adjust their overall customer bills by 2% in either
direction each month to reflect the current market conditions.
"I would call it a win because we got utilities to come down
more than we had anticipated, and it is a win because we got
benefits for ratepayers that they have never had before, like
extended payment plans without interest," said Peretz. "I think it
is also a win because the board directed that utilities with their
filings have to give the board information on their long term
energy plans, which is something we advocate. We want them to be
aware of the possibilities of hedging; we want them to diversify
their portfolios so they don't have all of the same kinds of
contracts; we want them to use the spot market at certain times;
and we want them to store their natural gas."
"On the one hand, we are pleased the board has recognized the
costs we have incurred, but on the other hand, the recovery of
those costs is not going to be quite as timely as we might of hoped
for," explained Koodray. "What the board was looking to affect here
is as much rate stability as possible through the phase-in, and I
think that's what your seeing and we can understand that."
NJNG spokeswoman Lori Backer said, "We are happy with the
increase because as far as timing goes, we had filed for this in
July and we were hoping for an October implementation or decision
on it. As soon as the weather starts turning cold, and people start
using gas and we are still billing at the lower rate, we are
creating a potential under-recovery. So the sooner we get to
implement the rate, the less of a deficit we start building."
NJNG and PSE&G released warnings and suggestions to their
respective customers, informing them of the rate hikes and the
effect it would have on their bills. NJNG said under the pending
plan its 400,000 gas customers prices would rise from $76.33 to
$89.63 per 100 therms, or about $12 a month on average. PSE&G's
new rate would raise the average monthly gas bill for 100 therms
from $70 to $81.20. PSE&G advised its 1.6 million gas customers
among other things to monitor their thermostats, insulate areas
around windows and doors and close off unused rooms.
ETG said the rate hike would raise its average gas customer's
bill from $82.80 to $97.09, a little over a $14 increase.
"We are actively out there pursuing the best possible
alternatives in the market, trying to buy with our customer's best
interest in mind," said Koodray "We do that, the customer wins, and
so do we. We recognize that we are going into a market that's going
to involve a much higher level of pricing than we saw last year."
Peretz said, "I think the utilities were aware that ratepayers
have to be able to afford energy and they were not happy about
coming in with large rate increases. The cost will be recovered
sometime, but we did not want to see an initial rate shock during
the winter season for customers."
She stressed the importance of energy conservation, including
proper insulation, thermostat management, and proper caulking on
windows. She also pointed out that customers in crisis should take
full advantage of available state and federal funds.
In August, SJG filed for a 19% rate increase, which it later
amended to 22 to 39.7%. Its rate case will go before BPU within the
next few weeks.