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WALL, N.J. – New Jersey Natural Gas (NJNG) sought approval today from the New Jersey Board of Public Utilities (BPU) for a 23.2 percent adjustment in natural gas prices effective December 14, 2005. The request comes after a stretch of record high natural gas prices that have shocked the wholesale market. As always, the price adjustment is a reflection of the commodity price of gas and does not increase profits to NJNG.
 
“While it’s a small consolation for our customers, we are pleased to say that through our efforts, and thanks to the BPU’s leadership in allowing New Jersey utilities to use purchasing strategies, we have been able to hold this adjustment to far below the original estimates forecast by the U.S. Energy Information Administration (EIA),” said Laurence M. Downes, chairman and CEO of NJNG. “Our commitment is to do all we can to minimize the impact of rising prices on our customers. Unfortunately, one thing we have no control over is the wholesale price of natural gas.”

The sharp rise in natural gas prices came as hurricanes ravaged the Gulf Coast, resulting in a decrease in natural gas production, and a warmer-than-normal summer caused an increase in the use of natural gas for electric power generation. The impact of these weather conditions, in addition to the already tight balance between supply and demand over the past few years and extreme volatility in the market, drove wholesale natural gas prices to all-time highs. Since NJNG’s last filing with the BPU in June 2005, natural gas prices have, at times, more than doubled, rising from $6.123 per decatherm for June purchases to $13.907 for October deliveries, a dramatic 127 percent increase, and $13.832 for November, a 126 percent increase over June. 

Several years ago, the BPU authorized a pricing mechanism for New Jersey’s natural gas utilities through which, after making an annual filing in June of each year, the companies have the opportunity to self-implement two rate adjustments of up to 5 percent each in both December and February. This allows the prices to keep pace with any upward trend of the natural gas market.  Based on recent market conditions, NJNG’s deferred balance could accumulate over $85 million by the end of the summer even if the two self-implementing increases were put into effect. Under those circumstances, the company would be forced to raise rates even further for the next heating season.

New Jersey natural gas utilities have the option to lock in prices for a portion of their natural gas supply during the summer months, when prices are typically lower. The ability to do this in a rising price environment has helped to minimize the impact of rising prices making NJNG’s price adjustment relatively lower when compared to utilities in states that are not allowed to secure the price on their supply in advance. These hedging practices enable NJNG to secure the price for about 80 percent of its anticipated natural gas supply for normal winter weather operations before the hurricanes hit and prices reached record levels. The company’s hedged positions have saved customers approximately $20 million for November’s supplies alone, eliminating the need for an additional 4 percent increase. The total hedged savings for this winter are currently valued at almost $140 million, offsetting the need for an additional 29 percent price increase. Unfortunately, due to the extraordinary conditions of the market recently, this effort will not be sufficient enough to offset the entire impact of the higher prices. 

If approved, the adjustment would impact the portion of customers’ bills that goes towards natural gas costs, which is approximately 75 percent of the total bill. Other charges are for service and delivery. NJNG has not filed a base rate case to increase its delivery costs in more than 11 years. During that time, customers have benefited from NJNG’s incentive programs which help to offset a portion of customers’ natural gas costs and also reduce exposure to higher market prices. Since their inception in 1992, these programs, developed in partnership with the BPU and the Ratepayer Advocate, have enabled NJNG to achieve over $265 million in savings for customers.

Customers can better plan their energy expenses this winter by enrolling in NJNG’s Budget Plan. The plan spreads estimated natural gas costs for the year into 12 equal payments, with a review mid-year to account for changes in usage or pricing. Not only is it very easy for customers to enroll by simply paying the budget amount on their NJNG bill, it is also free.

Working in conjunction with the BPU, NJNG offers the following tips to help save energy and money this winter:

• Set thermostats at 68 degrees during the day and 60 degrees at night. Each degree above these settings can result in a three percent increase in energy costs. While sleeping, add an extra blanket for warmth. Bear in mind that warmer temperatures are recommended for homes with ill or elderly persons or infants. Install a programmable thermostat to more easily control temperatures.
• Seal holes and cracks around windows, doors, light fixtures and walls. You can save 10 percent or more on your energy bill by reducing air leaks with caulking and weather stripping.
• Water heating accounts for 14 percent of a typical family’s energy expenses. A family of four, each showering for five minutes a day, uses 700 gallons of water each week. Set the temperature of your water heater at 120 degrees to save on energy costs without sacrificing comfort. For additional savings, wrap your water heater with an insulation blanket in accordance with the manufacturer’s guidelines. 
 • Keep warm air inside. If you have storm windows, make sure they are closed and in place. Close off vents or registers in rooms you are not using and close the door. Also, close dampers on unused fireplaces.
• Take a FREE Home Energy Analysis. It is a customized energy audit designed to help you stop losing energy and start saving money. It’s online at njliving.com.

More of these low- and no-cost energy saving tips can be found at NJNG’s Web site, njliving.com and New Jersey’s Clean Energy Program Web site, www.njcleanenergy.com.

“It is important for everyone to realize that if action is not taken to ease the burden on America’s natural gas supply, the market conditions we face today will persist,” Downes added. “There is no single solution to this problem. It will take the collective efforts of natural gas utilities, customers and policy makers to conserve our resources, and sensibly increase access to available supply sources.”

NJNG also encourages customers to apply for any of several energy assistance programs available, including the company’s own Gift of Warmth program, to help pay for natural gas costs this winter. More information on these programs can also be found at njliving.com.

New Jersey Natural Gas (NJNG) is the principal subsidiary of New Jersey Resources (NYSE: NJR), a Fortune 1000 company and a member of the Forbes Platinum 400. NJNG is one of the fastest-growing local distribution companies in the United States, serving more than 462,000 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 njliving.com.