The change is proposed to be effective October 1, 2010 and is subject to BPU approval. As a result of the filing, a typical customer using 100 therms a month will see their bill go from $138.75 to $135.86.
According to the company, this proposed decrease is in addition to $110m in reductions through customer refunds and bill credits since October 2009. The average residential heating customer received savings of approximately $241 during the time, representing an 18% reduction over the course of one year.
The majority of customers’ natural gas bills consist of two separate charges. The first, known as the base rate charge, is the cost of delivering natural gas service to homes and businesses. The second, the BGSS, is a commodity charge passed through to customers based on NJNG’s cost to acquire natural gas.
NJNG proposed a decrease to the BGSS rate that reduces the average residential heating customer’s bill by 3.5%. This portion accounts for more than 60% of a customer’s bill. Any change in the BGSS does not represent a change in profits to the company.
Through its Conservation Incentive Program (CIP), NJNG is able to encourage customer conservation and energy-efficiency improvements while stabilizing financial margins. In the filing, NJNG proposed an increase to the CIP recovery rate for residential heating customers, representing a 0.7% increase to the average bill.
From October 2009 to April 2010, customers realized commodity cost savings of approximately $13.4m due to their reduced natural gas usage. In addition, they will continue to receive annual savings of $5.5m in fixed-cost reductions as a result of lower demand fee charges, the company said.
NJNG said that the last filing was for the recovery of costs associated with its Accelerated Infrastructure Program (AIP), originally approved in April 2009. Through the AIP, NJNG is able to recover the cost associated with capital investment.
Estimated construction costs for these projects are valued at approximately $70.8m. Through April 2010, NJNG has spent $15.5m and anticipates spending $41.4m by September 2010. The impact to the average customer bill is a 0.7% increase.
