Rate Hikes for NJ Utility Customers, Further Increases to Pay for Clean Energy Likely

Tom Johnson | November 14, 2019 | Energy & Environment
BPU approves increases in bills for three of the state’s four gas utilities — and more rate hikes are possible
Credit: Twenty20
Customers’ bills will rise following yesterday’s decision by BPU to give rate increases to three utilities.

The state yesterday approved increases in bills for three of New Jersey’s four gas utilities, a sign the aggressive push to modernize the gas and electric grids is adding to rising energy costs for consumers.

In a matter of minutes and without discussion, the New Jersey Board of Public Utilities authorized increases for Elizabethtown Gas, New Jersey Natural Gas, and Public Service Electric & Gas. PSE&G’s increase was modest, boosting bills by only $10.16 a year to recover costs for a gas modernization program.

In the case of Elizabethtown, the increase for the typical residential customer amounted to $9.38 a month with approval of a $34 million annual increase in revenues. New Jersey Natural Gas boosted rates for its typical residential customer by $10.04 a month, as it had its revenue requirements boosted by $62.2 million.

Customers across the state are facing hikes in utility bills as policymakers push companies to increase the resiliency of their networks, reduce power outages and integrate solar and offshore wind energy into the electric grid. In addition, all electric customers throughout the state are now paying a $300 million subsidy to keep three nuclear power plants operated by PSEG Power open.

More rate hikes are likely as the state aims to jump-start an emerging offshore wind industry with more ratepayer subsidies; continue incentives to maintain a robust solar sector; and establish a new utility-driven program to get customers to reduce gas and electric usage.

More rate hikes on the horizon

Most of those programs come with big price tags. BPU projects the state’s first offshore wind project 15 miles off  Atlantic City will cost $1.6 billion. PSE&G wants to spend $2.8 billion promoting energy efficiency within its franchise area. Clean-energy advocates want to spend $300 million over the next 10 years offering rebates to motorists who buy electric vehicles.

“Ultimately, it is going to keep going up,’’ acknowledged Division of Rate Counsel director Stefanie Brand, a party to the settlements. “They (the utilities) have been doing a lot of infrastructure work. We’ve got to be very careful how we spend money. We can’t overpay for anything.’’

For New Jersey Natural Gas, the increase in their base rates — the second in three years — is a reflection of the $500 million the utility spent during that time modernizing its system, including replacing all of its old cast iron mains with new pipeline.

“These are the costs we have to make to operate our system,’’ said Michael Kinney, a spokesman for the Wall Township-based utility. “Even with this increase, New Jersey Natural Gas customers are spending 30% less on their bills than they were in 2008.’’

Low and fixed incomes

Evelyn Liebman, associate director for AARP of New Jersey, said that is of little solace to customers on either low or fixed incomes who now face paying up to $120 more a year on already high energy bills.

“What it means is it will be that much harder for them to keep the lights and heating on; afford their prescription; and buy groceries,’’ Liebman said. “That is a lot of money on utility bills that already are not affordable for many.’’

Whether those concerns slow down the push to modernize the energy system remains to be seen.

“I have not seen in any significant way that the state of New Jersey wants to slow down the additional capital invested in the system,’’ said Paul Patterson, an energy analyst with Glenrock Associates in New York.

Low natural gas prices might not help offset those investments long term, he said. “The benefit of natural gas to offset the increases is not going to last forever,’’ according to Patterson.