Lower Natural Gas Tariffs Also Mean Cheaper Electricity

Residential ratepayers could see gas bills drop by as much as 9 percent, while electricity prices could ease by 4 percent

It will be a bit cheaper to heat your home this winter if you rely on natural gas to keep it comfortable, and starting yesterday the cost of supplying electricity to your household will drop, too.

In filings with the state Board of Public Utilities (BPU), the four gas utilities yesterday proposed tariffs that would lower bills for residential ratepayers anywhere from 1 percent to 9 percent. Electric bills also would fall the same day the tariffs go into effect, primarily because of lower prices for natural gas, which is used to generate a good portion of the electricity employed to keep the lights on.

Electric bills would drop by 3 percent to 4 percent depending on the utility, but those decreases are likely to be more than offset by other increases in delivering power to customers later this summer, when heat waves drive up the cost of electricity.

Still, the filings continue a welcome trend of falling natural gas prices, a development that is due to strong domestic production, according to Katie Teller, an economist with the Energy Information Administration (EIA), an arm of the U.S. Department of Energy (DOE). The decreases are in line with the short-term outlook of the agency, which projects natural gas prices could be approximately 15 cents cheaper than last winter.

A Minor Heat Wave

Yesterday’s uncomfortable conditions notwithstanding, the administration also is projecting a cooler summer than last year, a prediction, if it holds true, that could lead to lower electricity costs for consumers, particularly those who ramp up air conditioners during extended heat waves.

“As wholesale natural gas prices continue to trend lower we are seeing savings and lower costs for residents and businesses that use natural gas all across the state,” said Greg Reinert, spokesman for the BPU. “While today’s filings are good news for most ratepayers, the board will continue to make every effort to drive ratepayers’ utility costs down and improve the state’s economic competitiveness.”

The filings come on a succession of lower gas prices for customers, due, in part, to the discovery of new deposits of fuel in Marcellus Shale in parts of Pennsylvania and New York, analysts said. For Public Service Electric & Gas (PSE&G) customers, for instance, gas charges have dropped 31 percent since January 2009, when wholesale prices started to come down. The utility’s customers will see bills fall by 1 percent this winter, if its tariff is approved by the board. Typical customers will see their monthly bills shrink by $2.06.

The biggest price decrease this winter will occur for customers of New Jersey Natural Gas in Wall Township, who will see their bills drop by 9.8 percent, or about $13 per month.

“At a time when it seems like everything is going up, today’s filings represent good news for our customers,” said Laurence Downes, chairman and CEO of New Jersey Natural Resources, the parent of the utility.

Besides the lower natural gas prices — the state’s utilities do not make any money on the fuel they purchase — Downes credited the company’s purchasing tactics, which include buying the commodity when prices are low as part of a hedging strategy. The savings are partly passed on to customers under an arrangement with the BPU.

At South Jersey Gas, customers will see their monthly bills drop by about 4.3 percent, or $5.94 a month. Elizabethtown Gas proposed a reduction of 8.9 percent, which would lower customers’ average bill by about $11 a month.

The reductions would have been even bigger if most of the utilities had not sought to recover costs for an accelerated infrastructure improvement program begun during the Corzine administration as a means of pumping money into the economy and creating jobs