Folsom,
NJ – Citing the need to recover costs
for $466 million of necessary infrastructure investments
that will have been spent from February 2004 to the end of
2010, as well as increased health care and pension costs,
South Jersey Gas announced today that it petitioned the New
Jersey Board of Public Utilities for a base rate increase.
SJG, the principal subsidiary of South Jersey Industries,
is requesting a $35 million increase in operating revenue,
representing about a 7 percent increase. In September 2009,
SJG implemented various rate reductions and credits, primarily
from a reduction in gas costs, totaling approximately $62
million. Even if SJG receives the full amount requested in
the base rate case, customers will pay approximately $27
million less than they paid prior to September. Company management
believes SJG is positioned to further reduce the rate for
gas costs during 2010, particularly if natural gas prices
continue to remain stable or decrease during the year.
As
a result of the rate decrease in September, a residential
heating customer is saving $25.42 on a 100-therm monthly
winter natural gas bill. If the base rate case is approved
as filed, a typical heating customer’s monthly bill
at 100 thermswould increase by $11.48, from
$142.56 to $154.04. Therefore, the net effect of the two
rate changes would be a net decrease of $13.94, or approximately
8 percent.
The petition includes a request
to increase the base rate component by $63 million, $28 million
of which will be offset by the elimination of the Conservation
Incentive Program rate component and the Capital Investment
Recovery Tracker component, making the net increase $35 million.
This is SJG’s
first base rate filing in seven years. SJG is the last of
New Jersey’s four gas utilities to file a recent base
rate case.
This proposal will provide
an additional $2.5 million in sales tax to the State of New
Jersey. The rate case process generally takes about one year;
therefore, any increase granted by the BPU would likely not
become effective until the end of 2010. In the interim, base
rates will remain the same.
“We will have spent $466
million to build, maintain and improve the natural gas infrastructure
to address the growing demand for natural gas in southern
New Jersey. This rate case see ks to earn a return on this
additional investment,” said
SJG President Edward J. Graham. “The improvements we
have made in the infrastructure are necessary to ensure that
our customers continue to receive reliable, uninterrupted
natural gas service. Significant increases in the cost of
health care benefits and pensions that have affected most
companies also contributed to the need for an increase,” noted
Graham.
Additionally, SJG’s utility
infrastructure is vital to support southern New Jersey’s
economy. A major participant in New Jersey’s Economic
Stimulus Plan, SJG made investments in infrastructure and
energy efficiency projects in accordance with the Stimulus
Plan. Through those programs SJG also helped create jobs
during the nation’s
economic crisis. SJG’s
infrastructure investments will maintain the need for 125-150
direct construction jobs created to implement approved projects
through our Accelerated Main Replacement Program. Incremental
AMRP expenditures projected for subsequent years, if approved,
could create or preserve approximately 450 to 850 ancillary
or indirect jobs, in addition to the 125-150 direct construction
jobs highlighted above.
SJG’s management has
taken various measures over the past seven years to delay
a base rate increase, which include implementing operating
efficiencies and productivity improvements that have lowered
operating and maintenance expense without jeopardizing the
ability to provide safe and reliable service. Also, due to
lower interest rates, SJG has borrowed funds for capital
improvements at a lower cost.
Also included in the filing
are proposals to implement a tariff to sell natural gas
for use in natural gas vehicles and for use in powering residential
electric generation equipment.
“We understand how
a rate increase affects our customers especially those
on fixed incomes,” says Graham. “That
is why we make every effort to avoid increasing rates. We
also take every available measure to help our customers pay
their bills.” The company offers an Equal Payment Plan
option and refers customers to assistance programs such as
NJ Shares, Home Energy Assistance or Lifeline for which they
may qualify. In addition, customers can access valuable information
on the website about services and programs, including energy
audits and energy efficiency tips and options that can help
reduce energy use and costs while still retaining comfort.
Visit www.sjgroadmap.com to
access this energy efficiency information.
For more natural
gas safety information, please visit www.southjerseygas.com
South Jersey Gas is the principal
subsidiary of South
Jersey Industries (NYSE:SJI)
and provides natural gas service to more than 342,000 residential,
commercial and industrial customers in Atlantic, Cape May,
Cumberland, Salem, and significant portions of Gloucester,
Burlington and Camden Counties in New Jersey. Visit http://www.southjerseygas.com to learn more about South Jersey Gas and its programs
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