Natural gas customers in New Jersey will see some welcome drops in their energy bills this winter—even after absorbing increases to pay for accelerated expenditures to upgrade their pipelines and infrastructure to jumpstart the economy.
The New Jersey Board of Public Utilities (BPU) yesterday approved new tariffs for the four gas distribution utilities, all of which will lower costs for their customers this winter because of a continuing decline in wholesale gas prices.
The declines are largely a result of expectations that discoveries of new untapped natural gas deposits in the Marcellus Shale formations in the Northeast will prolong a drop in prices of the fuel. Besides heating a majority of homes in the state, natural gas is also a big source of producing electricity.
"It is largely the result in the drop in wholesale prices of natural gas," said Jerry May, director of the Division of Energy at the BPU. "The trend is one of stabilization and the continued reduction in the price of natural gas."
Those declines will more than offset rate increases granted to the four utilities for expediting upgrades to their infrastructure, a policy begun in the Corzine administration as a way of pumping more money into the economy. The agency typically couples rate increase approvals with other factors, leading to an overall drop in bills to counteract any rate boosts.
For example, Elizabethtown Gas customers will see the cost of their natural gas drop by $110.70 a year, although that decline will be somewhat offset by an increase in rates resulting from improvements to its infrastructure that would boost the average resident's bill by $31.50 a year.
That experience was repeated with other utilities, although to a lesser extent at a couple because of rate declines approved earlier.
In the case of New Jersey Natural Gas, the basic drop in natural gas costs, which the utilities simply pass on to customers without making any profits, will result in a decline in the typical customer bill of $123 a year. Its recovery of enhanced infrastructure improvements will increase customer's bills by only $8.30 a year, according to May.
At Public Service Electric & Gas, the typical customer bill will drop about $16 a year, not only because of the drop in commodity prices, but also because of factors in calculating gas bills. The utility noted that residential gas bills have dropped by 32 percent since January 2009, when wholesale gas prices began their decline.
For South Jersey Gas, the average residential customers will see a $34.60 annual reduction in their bills, a drop that seems less significant than other utilities only because the utility has had other downward adjustments in its bill previously, according to May.
Some of the utilities' decreases could be modified by other proposals adopted by the board. The rates will take effect October 1.