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New Jersey Approves Gas Rate Hikes For Three Utilities

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.

Alex Steis

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