Press of Atlantic City

Natural Gas Hike Could Hit 17.8%

Press of Atlantic City — Saturday, May 31, 2008

Staff Writer

The state's major gas utilities can no longer ignore the rise in natural gas prices - and now, neither can consumers.

South Jersey Gas and New Jersey Natural Gas were among the utilities on Friday to propose rate hikes amounting to double-digit percentage increases on customers' bills. Petitions were filed with the New Jersey Board of Public Utilities, which must approve the requests.

Folsom-based South Jersey Gas, with more than 335,000 customers throughout much of southern New Jersey, wants a 17.8 percent rate increase, which would raise the average residential customer's bill by about $18.92 per month, or $227 annually.

New Jersey Natural Gas, which serves about 210,000 customers in Ocean County, wants to pass along an 18 percent increase. That equates to $27.10 more on a monthly bill, or from $150.76 to $177.86, for customers who use the average 100 therms of gas per month over a year.

The BPU already is considering a request made in November by the Monmouth County-based New Jersey Natural Gas to raise rates by 7.5 percent, or an additional $11.35 per month based on the 100 therms per month average.

"We realize that many of our customers are dealing with the effects of an economic downturn and that rising energy costs are a major aspect of that," said Mark Sperduto, the utility's vice president of regulatory affairs. "We will continue to do everything we can to minimize the impact of the increase in natural gas costs and we encourage our customers do the same through conservation efforts."

Incidentally, as part of its annual gas supply filing with the BPU, the Newark-based Public Service Electric & Gas Co. is asking for a 20 percent rate increase, adding $28.60 more to an average monthly bill.

If approved by the state, all the utility companies' increases would take effect Oct. 1, considered the start of the winter season.

Ev Liebman, a director with New Jersey Citizen Action, a watchdog coalition, calls the rate hike requests "an ugly situation," especially for those who rely on natural gas to heat their homes in the winter.

"This is really insult to injury," Liebman said. "Now to be confronted with the possibility that some of the increases are up to 20 percent, I don't know how some people are going to be able to afford the basic necessities of life. You have record numbers of shutoffs already."

According to the BPU, electric utility shutoffs in New Jersey – caused by consumers' failure to pay their bills – increased to more than 175,000 households in 2007, a 15 percent increase from the year before. Gas shutoff totals held steady with about 20,300 in 2007.

"I think it's too early to tell whether the increases in rates proposed now can be justified," Liebman said. "There's no doubt that we have an energy crisis and it's having an impact on prices."

The 12-month average price of natural gas futures on the New York Mercantile Exchange has shot up 33 percent, from $8.61 per decatherm in May 2007 to $11.461 per decatherm in May 2008, New Jersey Natural Gas said.

Add to that lower inventories and a greater demand for natural gas – caused by people trying to avoid the rising cost of crude oil prices – and the fuel is only expected to surge in wholesale price.

Gas utilities, meanwhile, are not able to profit from any rate increases.

South Jersey Gas collects money through its Conservation Incentive Program, which allows it to make profits based on its share of the utility market and the efficiency of its service, rather than how much natural gas is sold.

Based on the program, the utility is also requesting a 1.5 percent increase, or an additional $19 per year to the average residential customer.

"We monitor natural gas prices daily and continually work to identify opportunities to purchase natural gas supplies at the lowest possible cost," South Jersey Gas President Edward Graham said in a statement. "We have the ability to give our customers a credit when prices fall and if that occurs we will exercise this option as we have in the past."

Graham said that even with the proposed rate increase, natural gas will be nearly 40 percent cheaper than heating sources such as propane, oil and electricity.

On the electricity front, utility consumers in southern New Jersey will see some ease. Atlantic City Electric announced earlier this week that average monthly bills will increase by $1.25 starting June 1 – much smaller compared to the previously announced rate hike of more than $17 per month.

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