Ringing in the new year with a natural gas rate cut, the New Jersey Board of Public Utilities (BPU) issued orders Wednesday on a number of PSE&G filings, which have the combined effect of reducing rates for the company’s typical residential gas heating customers (who use an average of 200 therms in the winter and 1,252 therms annually) by 3.3%.

In May 2001, PSE&G filed a gas base rate case for the first time in nearly a decade, seeking to increase rates for the delivery of natural gas to all its gas customers. The company said the rate increase would reflect the utility’s 10-year, $1.2 billion investment in the delivery infrastructure. PSE&G along with the Ratepayer Advocate and board staff reached a settlement, approved by the board Wednesday, that will result in an increase of 5.3% on the typical residential heating customer’s bill.

Due to falling natural gas prices late last year, PSE&G submitted a proposal in November to reduce its residential 2001-2003 commodity charges for natural gas, which would have reduced typical residential heating customer bills by 10.7%. In Wednesday’s decision, the board ordered those charges to be reduced further with a resultant 12% decrease in bills, on an interim basis.

In addition, the board said Wednesday that PSE&G will simultaneously implement its previously approved Gas Cost Underrecovery Adjustment (GCUA) surcharge to recover from residential customers over a three-year period its Oct. 31, 2001 gas cost underrecovery balance of $130 million, increasing the typical residential heating customer’s bill by 3.5%.

Taking into account all of the BPU’s actions Wednesday, the cumulative effect will be to lower bills for the 1.4 million PSE&G residential gas customers by an average of 3.2% (3.3% for typical residential gas heating customers).

In addition, the BPU approved PSE&G’s request to transfer the company’s interstate pipeline capacity, storage and gas supply contracts to an unregulated affiliate, PSEG Power, which will provide the gas supply to PSE&G to serve its customers under its basic gas supply service obligations. The transfer, which won the support of third-party suppliers, is expected to increase competition in the state’s gas market.

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