New Jersey Natural Gas
NEW JERSEY NATURAL GAS REACHES AGREEMENT WITH RATE COUNSEL ON BASE RATE CASE PROCEEDING
08/05/2008 - For Immediate ReleaseUnder the agreement, NJNG would increase its total annual revenue by $32.5 million, effective October 1, 2008. The agreement includes a return on equity of 10.3 percent, with a 51.2 percent common equity ratio. It reflects a rate base of $943.3 million for NJNG and an overall rate of return of 7.76 percent. Additionally, the agreement calls for an expansion of the currently approved Basic Gas Supply Service (BGSS) incentive programs, which would continue through October 31, 2011. The utility would reduce the overall depreciation rate from the previously approved 3 percent to 2.34 percent. It also agreed to include $1.4 million annually in its base rate for operation and maintenance expenses associated with pipeline integrity management and provide for a deferred reconciliation of the actual costs incurred. (For more details of the rate case agreement, please see the fact sheet below.)
“We believe a reasonable agreement has been reached and look forward to working with our regulators on the finalization of the rate case,” said Laurence M. Downes, chairman and CEO of NJR. “We are confident that the ultimate outcome will serve the best interests of our customers and company.”
As part of the agreement, NJNG would also begin installing automated meter reading equipment in a portion of its service territory and would transition to monthly meter reads for all customers in an effort to provide better service and more accurate information.
This was the first base rate case filed by NJNG since April 1993. Over that time, NJNG has invested more than $650 million for system improvements and expansion as well as compliance with new federal pipeline regulations. In addition to absorbing cost increases associated with inflation, the company has added over 1,500 miles of new main, installed more than 132,000 new services and added approximately 157,000 new customers during that time period. NJNG originally sought an increase of $58.4 million.
Base rates are the portion of the customers’ bill designed to recover NJNG’s delivery costs, including operating and maintenance expenses, and provide the opportunity to earn a profit. Typically, natural gas bills consist of two main parts: the delivery charge, which is the cost of delivering the natural gas and maintaining the distribution system, and the BGSS, or the portion of the bill that goes toward purchasing the commodity and moving it through the interstate system. Utilities do not make a profit on the sale of natural gas, the cost of which is passed through to customers. While the impact of this settlement upon the various classes of customers will not be determined until later, it is expected that, if adopted, the average residential customer using 100 therms a month could see an overall increase between 4 and 4.5 percent. This adjustment would help NJNG recover the costs of constructing, operating and maintaining its infrastructure and enable the utility to continue to provide customers with safe, reliable service.
“As energy costs continue to go up, we are acutely aware of the impact on our customers, especially in these difficult economic times,” said Downes. “While we continue to do everything we can to minimize the impact of higher prices, we also encourage customers to save through conservation and to take advantage of the many resources available to help them meet their energy needs.”
New Jersey Natural Gas (NJNG) is the principal subsidiary of New Jersey Resources (NYSE: NJR), a Fortune 1000 company. NJNG serves more than 483,000 customers in New Jersey’s Monmouth, Ocean, Middlesex and Morris counties. This service area’s demographics and quality of life contribute greatly to NJNG’s growth. NJNG’s progress is a tribute to the dedicated employees who have shared their expertise and focus on quality through more than 50 years of serving customers and the community to make the company a leader in the competitive energy marketplace. For more information, visit NJNG’s Web site at www.njliving.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR’s ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Other factors that could cause actual result to differ materially from the company’s expectations include, but are not limited to, the company’s ability to obtain governmental approvals, the impact of regulation (including the regulation of rates), the regulatory and pricing policies of federal and state regulatory agencies and changes due to legislation at the federal and state level. More detailed information about these factors is set forth in NJR’s filings with the Securities and Exchange Commission (SEC), available at www.sec.gov. NJR does not, by including this paragraph, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.
Attachments:
Base Rate Agreement Fact Sheet
Contact:
Michael Kinney, Media
732-938-1031
Dennis Puma, Investors
732-938-1229
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