NJ Added to the List of Free Choice States
Joining a short list of other states, New Jersey opened upentirely to gas supplier choice earlier last week. At a specialmeeting on Jan. 10, the Board of Public Utilities (BPU) approved ofeach of the state’s four main gas utilities’ unbundling plans. Thelegislation calling for this deregulation was enacted lastFebruary.
New Jersey is only the fourth state to have complete gas choicestatewide. The others are New Mexico, New York and West Virginia,according to the Energy Information Administration. While theseother states are unbundled, none of them have had a significantportion of their gas users switch to alternate suppliers.
Conversely, customer choice has enjoyed greater success in otherstates. Although one small distributer continues bundled sales inGeorgia, almost all gas users in the state —1.4 million —have switched under a mandatory unbundling plan employed by thestate’s dominant utility, Atlanta Gas Light.
In an attempt to boost the number of switches now that theentire state has unbundled rates, New Jersey’s deregulationlegislation required that each utility include a “shoppingincentive.” If a residential customer switches to a third-partysupplier, the incumbent utility will discount a certain amount fromits distribution charge. The state hopes this incentive will helpmotivate residential customers to shop for their gas service. ForNew Jersey Natural Gas, the shopping incentive is 2.5 cents/therm.For South Jersey Gas Co., the incentive is 1.72 cents/therm off thedistribution charge. For Elizabethtown Gas Co., the incentive is 2cents/therm and for PSE&G, it’s 4.1 cents/therm.
“The incentives are being provided in order to stimulate acompetitive marketplace. And they should accomplish the goal ofstimulating the market without having any permanent effect onnon-shopping gas customers,” said BPU President Herb Tate.
Another aspect of the deregulation legislation is the inclusionof a “price to compare” requirement. Each of the four utilitieswill submit a price to its customers. The price is its gas supplyportion of the monthly bill. Customers can use this price tocompare with third-party suppliers so that they can calculatesavings.
There are 27 third-party marketers in Elizabethtown Gas Co.’sservice territory, 23 in New Jersey Natural’s territory, 23 inPSE&G’s territory and 22 in South Jersey Gas’ territory. Somemain marketing players, such as FirstEnergy Services Corp., DukeSolutions Inc., Enron Energy Services Inc., NUI Energy Inc. and ACNEnergy Inc. are certified to supply gas in all four territories.
New Jersey’s gas industry generates $3.047 billion in annualrevenues, the BPU said. Of the state’s 8.1 million people, theindustry serves 2.2 million residential customers, 231,000commercial customers, and 3,100 industrials. PSE&G is thelargest gas supplier with close to 1.6 million residential gascustomers. New Jersey Natural Gas is the largest independent gassupplier in the state, serving nearly 370,000 residentialcustomers.
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