New Jersey Natural Gas Settlement Will Add $7 a Month to Customer Bills

Tom Johnson | September 21, 2016 | Energy & Environment
Rate increase far smaller than 24 percent boost originally sought in 2015

new jersey natural gas
The state is expected to approve a settlement Friday that would boost the gas bills of customers of New Jersey Natural Gas by a little more than $7 a month.

The settlement, announced earlier this month by the Wall utility, is scheduled to be voted on by the New Jersey Board of Public Utilities at its monthly meeting in Trenton. The agency’s staff, the Division of Rate Counsel, which represents consumer interests, and AARP New Jersey signed on to the settlement.

The rate increase, the first for the company since 2007, is much less than the 24 percent increase originally sought by New Jersey Natural Gas when it filed its petition in November 2015.

If approved by the five commissioners, the utility would increase its total annual revenue, probably effective October 1, by $45 million, far below the original $148 million sought by the company.

In announcing the settlement, Laurence Downes, chairman and CEO of New Jersey Natural Gas, called the settlement a fair agreement. “We are confident the ultimate outcome will serve the best interests of our customers and company.’’

The proposed settlement was whittled down, in part, because rate increases tied to a proposed gas pipeline in its territory — the Southern Reliability Link project — were not included in the agreement. New Jersey Natural Gas is expected to seek regulatory approval for that project in a future proceeding.

The Southern Reliability project is a new 30-mile pipeline, crossing a portion of the Pinelands, designed to enhance reliability to customers in Monmouth and Ocean counties. The project, approved by the BPU in March, still needs to obtain permits and faces a court challenge from environmentalists.

Under the settlement, the utility would continue work on a $157.5 million enhancement program to safeguard 276 miles of unprotected steel mains and other services in its distribution system.

In 2015, New Jersey Natural Gas became the first utility in the state to eliminate cast-iron pipes from its system. Cast-iron gas mains are more prone to leak methane, a potent greenhouse gas that contributes to climate change

The settlement, initially approved by an administrative law court judge, would boost the typical residential bill by $7.11 a month, or 7.4 percent, from $95.44 to $102.55. A decrease in wholesale natural gas prices will offset the increase this winter, the utility said.