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Consumers Get a (Small) Break on Their Electric Bills

Falling natural gas prices and a still-sluggish economy mean most consumers will pay less for power.

For the third consecutive year, most customers in New Jersey will see a modest drop in their electric bills, beginning this June.

The slight dip, ranging from $4.27 per month to $5.63 per month depending on the utility, occurs because natural gas prices have declined markedly in recent years and a still recovering economy has depressed electricity prices somewhat, according to state officials. Yesterday, the state Board of Public Utilities (BPU) approved the results of an annual auction that determines a big part of what consumers pay for the power to light their homes.

The results will probably more than offset other increases in electric bills that ratepayers have absorbed in recent years, including higher costs to maintain the reliability of the power grid and efforts to promote energy efficiency and cleaner ways of producing electricity.

"While the auction results were good news for most ratepayers, the board will continue to make every effort to drive ratepayers' utility costs down to improve the state’s economic competitiveness," said BPU President Lee Solomon.

Online Auction

The online auction, which began on Friday and ended Tuesday, is the vehicle the state agency has chosen to buy the electricity it will need to supply the residential and small commercial customers who have opted to stay with their incumbent utility rather than switch suppliers.

In the auction, the state’s four electric utilities purchase one-third of the power they will need to supply customers. The other two-thirds of the electricity they need is purchased under contracts in the prior two years, a system that helps avert big rate spikes when fuels used to generate electricity experience volatility and soar.

This year, the power being purchased was about 16 percent less expensive than the electricity the utilities purchased three years ago, but since the generation side accounts for between 60 percent and 70 percent of a customer’s bill, the savings will amount to 3 percent and 4 percent of a savings, depending on the utility.

Welcome News

Still, it is enough to be welcomed by consumer advocates. "It’s certainly better than going in the other direction," said Ev Liebman, program director of New Jersey Citizen Action, who has been a frequent critic of the secretive nature of the auction. "It’s good news, but we still don’t have the transparency we need to know if the rates are the right numbers," she said.

Division of Rate Counsel Stefanie Brand also welcomed the drop in overall prices, but questioned why the rates this year rose above the prices for Atlantic City Electric and Rockland Electric last year. While overall rates dropped, the price per kilowatt hour for the half million customers of Atlantic City Electric increased from 9.856 cents per kilowatt hour to 10.095 cents, while Rockland Electric’s customers will pay 10.68 cents this year, compared with 10.332 cents in the prior year.

The 1.9 million customers of Public Service Electric & Gas (PSE&G) will see their monthly bills drop by $4.27 a month overall, while Jersey Central Power & Light’s one million customers will pay $5.53 less a month. Atlantic City customers will see bills decline by $5.63 a month, and Rockland Electric’s bills will fall by $4.34.

The high cost of electricity has become a rising concern of lawmakers and the Christie administration, so much so that a bill was recently passed and signed by the governor to have ratepayers subsidize the construction of up to 2,000 megawatts of new generating capacity. One megawatt is enough to power about 800 homes.

Proponents say the subsidies will help reduce electric bills, but the move has been criticized as a giveaway to special interests. "The electric rates dropping are short-lived for now, but rates will increase with this corporate welfare giveaway to power plants," said Jeff Tittel, director of the New Jersey Sierra Club. "Under this legislation, more than $2 billion will go from consumers to power plant developers."

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