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Forecast: NJ Heating, Electricity Costs Will Drop This Winter

Credit goes to state’s widespread use of natural gas and wider access due to controversial ‘fracking’ to tap into new underground supplies

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It will be more expensive this winter for people nationwide to heat their homes and keep the lights on -- but not in New Jersey.

It will cost up to 13 percent more to heat homes with natural gas and 2 percent more for electricity in coming months, the U.S. Energy Information Administration projected yesterday in its annual short-term winter outlook.

In New Jersey, however, costs will drop, albeit modestly, but still offering welcome relief in a state where business owners and residents often complain about paying some of the highest energy costs in the nation.

Credit, in part, goes to increased drilling for natural gas in the Marcellus Shale portions of Pennsylvania and neighboring states, which is making cheaper supplies of the fuel readily available to New Jersey consumers and businesses for both heating and electricity.

Three of the state’s four gas utilities will see consumer prices either drop by as much as 4.3 percent (in the case of Elizabethtown Gas) or remain flat (for those served by Public Service Electric & Gas). Meanwhile, electricity prices in New Jersey already have been locked in for the winter season, and those costs will fall up to 5 percent for customers, depending on which of the state’s four utilities serves them.

That is a far cry from what the EIA forecasts for the rest of the nation. More than 90 percent of homes in the U.S. are expected to have higher heating costs this winter, mainly because of steeper projected costs for residential natural gas, propane and electricity, according to the federal agency.

For natural-gas customers, that could translate into a $679 increase in their bills this winter, according to the EIA forecast. The only good news is that home heating oil costs are expected to drop by 2 percent this season, the agency said.

In New Jersey, the outlook is a more promising, due to a number of factors, according to energy executives. Nearly 3 million New Jersey households are heated by natural gas, one of the highest concentrations of natural-gas use in the nation, according to the state’s energy master plan.

“Marcellus Shale drilling has benefitted New Jersey,’’ said Tancred Lidderdale, an analyst with the EIA in Washington, D.C. “It also depends on when they (utilities) bought the gas and locked in prices.’’

Tony Robinson, director of basic gas service for PSE&G, agreed. “It’s primarily because we’re situated so close to the Marcellus Shale,’’ Robinson said.

Michael Kinney, a spokesman for New Jersey Natural Gas, whose customers already have seen prices fall by 2.2 percent this past June, offered another explanation.

“The simple answer is storage and hedging,’’ said Kinney. Like many other utilities, NJNG buys natural-gas supplies in the summer when prices are low, stores it, and makes it available to customers when they need it.

A factor in the nationwide increase in natural-gas costs is the fact that there are constraints in delivering natural-gas supplies from the Marcellus Shale region to New England, according to Robinson and others. Whether that foreshadows any future impact on prices of the fuel remains to be seen.

In its projections, Lidderdale said, the agency looked at last winter’s natural-gas prices as hitting a low point. “Our forecast, at least for the short term: higher prices, but still lower than historical averages,’’ he said.

Critics of the move to exploit new natural-gas deposits by the controversial technique of pumping massive amount of water into shale deposits, have a different perspective. They fear the practice, known as hydraulic fracturing (or fracking) poses a threat to environmental resources, including drinking water supplies.

“The natural-gas driven industrial renaissance is over,’’ predicted Bill Wolfe, executive director of the New Jersey section of Public Employees for Environmental Responsibility, a public watchdog group. Wolfe argued the huge demand from new natural-gas plants could drive prices up sharply.

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