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New Jersey LDCs Team Up to Market Pipe Capacity

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 South Jersey.

"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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