Home Heating Costs Likely to Tick up with Price of Natural Gas

NJ homeowners could see their monthly bills increase by as little as 80 cents or as much as $8.00 depending on which utility they use

For the first time in several years, winter heating costs could rise for most consumers if they rely on natural gas.

In filings with the state, three of New Jersey’s four gas utilities are seeking to boost rates beginning in October, if only modestly for most customers. The other utility is essentially keeping rates flat.

The increases mark a sharp reversal from recent years, when prices for the fuel dipped dramatically because of exploitation of new supplies of cheap natural gas in the Marcellus shale formations of Pennsylvania. In some cases, prices are as much as 50 percent below what customers paid in 2008.

South Jersey Gas is the only utility proposing to lower prices later this year, seeking approval to drop rates by 0.6 percent or by 80 cents per month on customers’ bills. Public Service Electric & Gas is seeking a 3.6 percent increase in gas bills; New Jersey Gas a 2.9 percent boost; and Elizabethtown Gas, a 10.2 percent surge.

The rates, subject to the approval of the New Jersey Board of Public Utilities, are expected to take effect October 1.

Utility executives blamed higher market prices for natural gas for the increase in rates, factors driven by depressed production levels of the fuel and higher demand. Utilities do not make a profit on the gas, deriving their earnings mostly from delivering the fuel to customers.

“The costs for gas from the Marcellus shale region also are higher due to an increase in demand as a result of several pipeline expansions that are now accessing the Marcellus region as a supply source,’’ said Jose Cardenas, a vice president at PSE&G.

Rapid expansion

New Jersey is undergoing a rapid expansion of its natural gas infrastructure as a result of the newfound supplies, with more than a dozen new pipelines either approved or pending review by regulators. In the past, however, the industry has touted the pipelines as delivering cheaper supplies to customers.

Division of Rate Counsel director Stefanie Brand said the prices may be ticking up, but they still are far below what customers were paying about a decade ago.

“There is increased demand generally because we are generating more of our electricity from natural gas,’’ Brand said.

Indeed, the Energy Information Administration forecasts that the use of natural gas will exceed that of any other fuel used to produce electricity for the third consecutive summer.

Asked whether the increases consumers face this winter signal an end to the natural-gas boom, Brand replied, “Not at all.’’ The Marcellus shale supplies were a “game-changer, and it still is,’’ she said.

For PSEG’s customers, the boost reflects the first gas rate increase in nine years. The typical residential gas heating customer will pay about $5 more a month in winter.

At New Jersey Gas, the bill will incorporate several changes with the overall effect resulting in an increase of $3.02 per month for the typical residential customer. Elizabethtown customers’ bills will rise about $8.35 a month for the average residential customer.