New Jersey Natural Gas Co. (NJNG) and South Jersey Gas Co. (SJG)have formed a one-year alliance to capitalize on supply portfolioassets and create new marketing opportunities. The LDCs agreed torelease capacity to each other for more effective marketing of thatcapacity. For instance, South Jersey is a bigger player than NewJersey Natural on pipelines Columbia and Transco, while New JerseyNatural is a bigger player on Texas Gas and CNG. Under thearrangement, South Jersey will release its contracts on Texas Gasand CNG to New Jersey Natural, and New Jersey Natural will releaseits Columbia and Transco capacity to South 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 more we can efficiently use that capacity where inthe summer either company may not actually need the capacity at alland the other company may be able to market it through theirexpertise.” 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 combinedtotal of more than $104.4 million to their customers. The allianceis expected to generate more benefits for customers andshareholders.

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