NJNG Files Rate Case with Board of Public Utilities

New Jersey Natural Gas (NJNG) filed a request on November 13 with the New Jersey Board of Public Utilities (BPU) seeking an increase of approximately $148 million to its delivery rates, primarily to cover the cost of constructing, operating, and maintaining its infrastructure. If approved, it would result in an overall increase of approximately 24 percent on the typical customer’s annual bill – or $236.40 for the year.

NJNG provides regulated retail natural gas service to Garden State customers within Monmouth and Ocean counties; as well as portions of Burlington, Middlesex, and Morris counties.

Delivery rates are the portion of the customer’s bill designed to cover NJNG’s delivery costs, including operating and maintenance expenses, as well as the cost of constructing its infrastructure, which includes the opportunity to earn a profit on investments in infrastructure used to provide service to customers.

“This filing, assuming the normal BPU review process, will not have any impact on this winter’s heating bills,” the utility promised in its announcement of the rate hike, noting, “ In fact, during the heating season, the typical residential and small commercial customer’s bill is expected to be 17 percent lower on an annual basis, as a result of a $76 million Basic Gas Supply Service bill credit implemented by NJNG.”

The BGSS credit, which reflects lower natural gas supply costs, is in effect for natural gas usage between November 1, 2015 and February 29, 2016, and is expected to save the average customer approximately $166 over the four-month period.

“We have requested this increase so we are able to adequately meet the necessary future infrastructure investments to ensure the same safe, reliable service our customers expect and deserve,” said NJNG CEO Laurence M. Downes. “Customers should know that, even with the proposed change, their bills would still be 29 percent lower than they were when our last rate case was approved — thanks to the decline in wholesale natural gas prices.”

New Jersey Natural Gas has not filed a general request to increase delivery rates since 2007. The company states that the timing of this filing is driven by “NJNG’s substantial capital investment in infrastructure over the past seven years,” as well as its agreement to file a rate case no later than November 15, in accordance with the BPU’s Order in the matter for approval of the Safety Acceleration and Facility Enhancement (SAFE) and New Jersey Reinvestment in Facility Enhancements (NJ RISE) programs.

From 2008 through 2015, NJNG claims to have invested approximately $806 million in its natural gas transmission and distribution system. This includes expenditures for customer growth, as well as system improvements, reinforcements, replacements and retirements.

Over the seven-year period, NJNG experienced an average customer growth rate of approximately 1.5 percent annually. These new customer additions necessitated the installation of new mains, meter services and other distribution facilities. Additionally, it has a number of ongoing capital projects, including SAFE and NJ RISE. Two other important projects include the Howell liquefaction project and the Southern Reliability Link (SRL). These projects will significantly strengthen NJNG’s system and provide greater reliability and resiliency to the customers and communities it serves.

The BPU-approved SAFE and NJ RISE programs are focused on the replacement of aged infrastructure and storm readiness efforts. Through SAFE, NJNG has replaced approximately 203 , the company said, to replace a total of 275 miles of such facilities, and will have eliminated 100 percent of its cast iron main by the end of year-end2015. NJ RISE is NJNG’s response to storm mitigation efforts in the aftermath of Superstorm Sandy. It is designed to improve the overall durability, resiliency, integrity and safety of NJNG’s infrastructure, making it less susceptible to extreme weather conditions.

In its filing, NJNG requested an extension of the SAFE program to replace approximately 276 miles of remaining unprotected steel main and associated services. If approved, this $200 million capital investment program will be completed over the five years subsequent to the resolution of the rate case and further enhance the safety of NJNG’s system, as well as benefit local and state economies.

NJNG’s Howell liquefaction project will improve the reliability of its peak supply and provide savings for customers through lower costs. Additionally, the facility will eliminate the need to truck in 700 deliveries of liquefied natural gas annually. The project is currently in the construction phase and expected to be operational by April 2016.

The SRL, the 30-mile transmission pipeline project, will strengthen NJNG’s system by adding a second feed from a separate interstate supplier, thereby significantly enhancing its reliability and resiliency. NJNG has submitted its petitions to construct, operate, and maintain the SRL with the BPU. Pending approval, the Company plans to place it into service by the end of 2016.

Under normal conditions, the BPU’s review of NJNG rate filing could take up to 10 months.