Steep Rise in Natural Gas Prices Prompts New Jersey Natural Gas to Implement a 5% Increase to Cover Wholesale Commodity Costs

Rhea-AI Summary

New Jersey Natural Gas (NJR) has filed a request for a 5% increase in Basic Gas Supply Service (BGSS) rates, effective December 1, 2021, due to an 80% rise in wholesale natural gas prices since May 2021. This adjustment will raise the average residential bill by approximately $5.93 monthly, adding to a recent base rate increase of $13.23. NJR emphasizes that these costs are solely for recovering commodity prices, with no profit margin involved. They previously returned $20.6 million to customers through bill credits, demonstrating their commitment to managing supply and minimizing price volatility.

Positive

• None.

Negative

• 5% increase in BGSS rates, raising average residential bills by $5.93.
• Total monthly bill for average heating customer will rise from $117.05 to $136.21.
• Underlying wholesale gas price increases attributed to market volatility could affect customer affordability.

WALL, N.J.--(BUSINESS WIRE)-- Due to a significant increase in wholesale natural gas prices, today New Jersey Natural Gas (NJNG) filed a notice with the New Jersey Board of Public Utilities (BPU) for a 5% increase related to Basic Gas Supply Service (BGSS) for residential and certain small commercial customers effective December 1, 2021.

Since May 2021, wholesale natural gas prices on the NYMEX – a benchmark index for gas commodity pricing – have increased by nearly 80%. The change to the BGSS is necessary to recover these higher commodity costs. While the underlying reasons for the surge in market prices cannot be tied to one specific cause or event, potential factors influencing the wholesale prices include the global supply demand imbalance and lagging storage levels.

The BGSS rate reflects natural gas commodity prices. These costs are passed through directly to customers and do not result in any increase to NJNG’s profits. If prices decline in the future, NJNG will return any over recoveries to customers through bill credits or rate reductions, as it has done previously. Last year alone, NJNG provided customers with bill credits totaling $20.6 million.

“Through our purchasing strategies, New Jersey Natural Gas works to responsibly manage our supply to serve our customers and minimize the impact of price volatility as much as possible,” said Mark Kahrer, Senior Vice President-Regulatory Affairs, Marketing and Energy Efficiency at NJNG. “After more than a decade of relatively low natural gas prices, this year we saw a sharp increase to the wholesale cost of natural gas, requiring us to take this action. We will continue to monitor market conditions and whenever possible, we will pass on any savings to customers.”

The average NJNG residential heating customer using 100 therms a month will see their bill go up $5.93. This is in addition to the BPU’s recent approval of NJNG’s new base rates and annual BGSS and Conservation Incentive Program filings resulting in an increase of $13.23. When combined, the typical customers will see their monthly bill go from $117.05 to $136.21, effective December 1, 2021.

Consistent with the BPU’s January 6, 2003 board order, New Jersey’s utilities are permitted to implement rate adjustments of up to 5% in December and February. This allows for the necessary cost recovery to keep pace with any wholesale natural gas market trends. Utilities may also decrease rates at any time.

Any customer having trouble paying their natural gas bills should contact NJNG to learn about available energy assistance programs. Resources include deferred payment arrangements, budget plans, utility bill payment assistance, one-time grants and low- or no-cost energy- efficiency programs to help reduce consumption and lower bills.

“There are multiple options available to assist customers who need financial assistance to pay their utility bills. Federal and state programs are already in place to help, and NJNG’s Gift of Warmth program goes the extra mile to help our customers with their natural gas bills. If you are having trouble, reach out to us for assistance, we are here to help,” Mr. Kahrer said.

If you or someone you know is a NJNG utility residential customer in need of assistance, call 800-221-0051 and say "energy assistance" at the prompt to speak with an NJNG customer service representative or email us at energyassist@njng.com. NJNG also offers energy-efficiency programs through The SAVEGREEN PROJECT®, including rebates and financing options for high-efficiency equipment, to help customers save energy and money. For more information, visit savegreenproject.com.

About New Jersey Resources

New Jersey Resources (NYSE: NJR) is a Fortune 1000 company that, through its subsidiaries, provides safe and reliable natural gas and clean energy services, including transportation, distribution, asset management and home services. NJR is composed of five primary businesses:

• New Jersey Natural Gas, NJR’s principal subsidiary, operates and maintains over 7,500 miles of natural gas transportation and distribution infrastructure to serve over half a million customers in Monmouth, Ocean and parts of Morris, Middlesex and Burlington counties in New Jersey.
• NJR Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of more than 365 megawatts, providing residential and commercial customers with low-carbon energy solutions.
• NJR Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.
• Storage & Transportation serves customers from local distributors and producers to electric generators and wholesale marketers through its ownership of Leaf River Energy Center and the Adelphia Gateway Pipeline Project, as well as our 50% equity ownership in the Steckman Ridge natural gas storage facility.
• NJR Home Services provides service contracts as well as heating, central air conditioning, water heaters, standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey.

NJR and its nearly 1,200 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve^® and initiatives such as The SAVEGREEN Project^® and The Sunlight Advantage^®.

Follow us on Twitter @NJNaturalGas.
“Like” us on facebook.com/NewJerseyNaturalGas.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211119005640/en/

Media Contact:

Mike Kinney

732-938-1031

mkinney@njresources.com



Investor Contact:

Dennis Puma

732-938-1229

dpuma@njresources.com

Source: New Jersey Natural Gas

FAQ

What prompted New Jersey Natural Gas to request a rate increase for NJR (NJR)?

The request for a 5% increase in Basic Gas Supply Service rates by New Jersey Natural Gas was prompted by an approximate 80% rise in wholesale natural gas prices since May 2021.

When will the new rate increase for NJR (NJR) take effect?

The new rate increase will take effect on December 1, 2021.

How much will customers' bills increase due to the NJR (NJR) rate adjustment?

The average residential heating customer's bill will increase by approximately $5.93 per month.

What is the total impact on the average bill for NJR (NJR) customers after the increase?

With the recent base rate increase of $13.23, the total average monthly bill will rise from $117.05 to $136.21.

What measures does NJR (NJR) take to mitigate the impact of price volatility?

New Jersey Natural Gas employs purchasing strategies to manage supply and minimize the impact of price volatility on customers.