The New Jersey Board of Public Utilities (BPU) earlier this weekapproved a comprehensive agreement with New Jersey Resources (NJR),parent of New Jersey Natural Gas (NJNG), that would put it on afast-track to provide supplier choice to its residential customersby Jan. 1.

The kick-off date for residential gas unbundling, however,hinges on whether the BPU completes standards for marketers toparticipate in unregulated energy markets and guidelines for acustomer-education program, said Laura Conover, a spokeswoman forthe LDC. If these are unfinished, the BPU could delay the startingdate.

The agreement is a “significant step” for NJR since it makes thecompany the first one in New Jersey to voluntarily open all of itsmarkets to competition, said NJR Chairman and CEO Laurence M.Downes.

The agreement calls for NJR to provide customer-choice toresidential gas users almost a year ahead of the deadline specifiedin major energy restructuring legislation that was introduced intothe state Assembly on Monday, and is expected to make it to thestate Senate by Thursday. That bill would require the state’s gasmarkets to be unbundled by Dec. 31, 1999, and the electricitymarket to be open to competition by June 1, 1999.

The effort to inject competition into the state’s residentialmarket comes four years after NJNG unbundled its commercial gasmarkets, and a little more than one year after it began offeringsupplier choice to residential customers on a pilot basis.

Although customer choice is expected to come sooner for NJNGcustomers than others in the state, the LDC’s gas customers willface higher costs over a three-year period due to a BPU-approved3.5% hike in NJNG’s levelized gas adjustment clause. An averagecustomer using 100 therms of natural gas per month – and who usesNJNG for all of their gas services – will pay an additional $2.92each month, according to the company.

However, the agreement also would enable NJNG to credit agreater share of its off-system sales to offset price hikes through2001, the LDC noted. Formerly it credited 80% of these margins toreducing customers bills and 20% to benefiting shareholders, butthe agreement would change that sharing formula to 85/15 as of Oct.1. Since the program began in 1992, NJNG said it has credited morethan $88 million from these sales to maintain stable prices forcustomers. The company also plans to reduce the fixed costs bydesigning a more competitive natural gas portfolio. It noted itwill share these savings with customers and shareholders,respectively, on a 60/40 basis during the first year of eachtransaction, and subsequently 85/15.

The bill that has been introduced in the state Legislature wouldnot provide a guaranteed rate reduction for gas customers, but itdoes call for a minimum rate cut of 5-10% for electricitycustomers, said Paul Rosengren, a spokesman for Public ServiceElectric and Gas (PSE&G) in New Jersey.

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