Some Residents Will See Small Uptick in Heating Bills Next Month

Tom Johnson | September 26, 2017 | Energy & Environment
New rates reflect generally rising costs of natural gas because of increased demand

Richard Mroz, BPU president
When winter gas prices kick in next week, most customers will be paying a bit more, a reversal of an eight-year trend that has led to steep reductions in utility bills.

In approving the new rates that take effect on Sunday, three of the state’s four utilities will see prices increase modestly, while customers of New Jersey Natural Gas will save $7.30 over the year under actions taken by the Board of Public Utilities.

The slight boost in prices ended a run of steady decreases in gas costs for consumers, a development attributed to an abundance of natural gas, largely due to new supplies tapped in the Marcellus Shale formations of Pennsylvania.

The new rates are a reflection of generally rising costs of natural gas because of increased demand, but the prices also were impacted by varying weather and other surcharges on a customer’s bill.

Only New Jersey Natural gas customers will see bills dip this winter. Overall, the impact of the commodity cost and other components will boost the typical residential bill for Public Service Electric & Gas by $26.13; for Elizabethtown Gas by $73.17; and South Jersey Gas by $11.97.

BPU President Richard Mroz said there is increasing demand for natural gas across the nation and in Mexico in comments prior to the commissioners’ approval of the new rates at their monthly meeting Friday.

Despite the relatively small increases, Mark Beyer, the director of the agency’s Office of the Economist, said the outlook for natural gas is positive.

“What we have seen is prices have gone up in the past year,’’ noted Tim Hess, an analyst at the Short-Term Energy Outlook for the federal Energy Information Administration. “We’ve had quite a bit of demand growth in 2017.

The agency is forecasting a colder winter than the previous year, which also has boosted prices and driven increased production of the fuel, Hess said.

New Jersey is undergoing a rapid expansion of its natural-gas infrastructure as a result of the newfound supplies, with more than a dozen pipelines either approved or pending review. The spate of pipelines has been widely opposed by local communities and conservationists, who also question whether the projects will be a boon for consumers.

“It’s doesn’t really surprise me,’’ said Tom Gilbert of ReThink Energy New Jersey, referring to the increase in gas prices. “It’s what many experts have been saying that there is a real likelihood with these pipelines the prices would go up and not down.’’

Paul Patterson, an energy analyst at Glenrock Associates in New York, said the price of natural gas is fluctuating. “There are new uses for it coming on line and there is a move to export it.’’

Some studies have suggested, as well as an analysis by the New Jersey Division of Rate Counsel, that some projects, such as the PennEast pipeline, have failed to demonstrate the need for the gas, Gilbert noted.

Even with the new increases, customers are still paying a whole lot less than they were eight years ago when prices began a steady decline, according to the BPU. Both PSE&G and Elizabethtown customers are paying more than 50 percent less than they were in 2009, and New Jersey Natural Gas and South Jersey bills have dropped between 38.5 percent and 12 percent, respectively.