Gas Utility Seeks to Raise Rate to Offset Hardening of Distribution System

Tom Johnson | September 4, 2013 | Energy & Environment
New Jersey Natural Gas wants BPU to give blessing to $100M investment over next five years

natural gas
New Jersey Natural Gas is asking state regulators to allow it to invest more than $100 million over the next five years to make its gas distribution system more resilient to extreme weather.

The Wall Township facility, perhaps the gas utility hardest hit by superstorm Sandy last October, filed the petition with the state Board of Public Utilities yesterday. It is seeking to recover the capital investment costs associated with the program through an annual adjustment to its base rate.

What that means to the typical residential customer remains unknown, although rates will not increase this winter, according to Michael Kinney, a spokesman for NJNG.

“The impact will vary from year to year depending on the work that is done,’’ Kinney said.

The gas utility is the second to file for an increase in rates following Hurricane Sandy. In February, Public Service Electric & Gas filed for a $3.9 billion increase in rates over 10 years to harden its own gas and electric infrastructure. The case has yet to be reviewed by the BPU, but has stirred a bit of controversy among consumer advocates and the AARP.

Beyond those upgrades, the state’s seven utilities eventually will seek to recover nearly $1 billion in storm restoration costs stemming from the storm last fall. Kinney said NJNG’s costs could run between $30 million and $40 million, which they are not expected to seek to recover until the fall of 2015.

How those recovery costs will be allocated is currently part of a separate proceeding before the BPU.

With much of its franchise territory located in Monmouth and Ocean counties, NJNG suffered extensive damage to its infrastructure from the hurricane, leaving some customers without gas for up to eight weeks. The greatest damage occurred to the barrier islands from Bay Head to Seaside Park and Long Beach Island. About 8,000 customers are still without power, either because they have not yet rebuilt their homes or returned to them, Kinney said.

Working around the clock, NJNG repressurized or replaced 270 miles of main, installed one mile of 12-inch main, rebuilt or replaced 51,000 meters, completed 121,000 services assessments, and restored service to more than 30,000 customers in less than eight weeks following the storm.

“We have firsthand experience with the effects that extreme weather events can cause,’’ said Laurence M. Downes, chairman and CEO of New Jersey Resources, the parent company of the utility. “We are committed to improving our system and minimizing the impacts to our customers. While we can never predict the next superstorm, our customers can count on us to continue to meet their expectations for safety and reliability.’’

The proposal to enhance NJNG’s gas distribution system consists of six targeted upgrade projects — all designed to improve the durability, redundancy, stability, and integrity of its infrastructure, making it less susceptible to storm damage, according to the utility.

The projects include laying 1.5 miles of distribution main in Sea Bright as a secondary feed, moving a regulator station off the barrier islands, and installing a high-pressure feed to Mantoloking — one of the areas hardest hit by the storm.

In addition, the utility plans to implement a secondary gas line feed from Toms River to the South Seaside Peninsula; deploy six miles of distribution main as a secondary feed to Long Beach Island, and install other equipment on the same barrier island.

According to the utility, the upgrades will help mitigate the number and duration of outages, improve its ability to respond to and control service disruptions, and enhance the safety and reliability of its system.

If the proposal is approved by the regulatory agency, the utility said it will prioritize projects based on existing need, elevated concern, and community impacts.