Steep hikes for natural gas rates launch Saturday

Natural gas rate hikes approved by state regulators earlier this month will go into effect Saturday, with the increases poised to cost New Jersey residents hundreds of dollars more per year.

The provisional gas rate increases approved by the Board of Public Utilities for four utility providers — PSE&G, Elizabethtown Gas Company, New Jersey Natural Gas Company, and South Jersey Gas Company —could cost New Jerseyans heating their homes with natural gas as much as $31 more per month.

“The effect is going to be significant. People are going to see large increases in their gas bills,” said New Jersey Rate Counsel Brian Lipman.

The impact will be particularly severe for residents with fixed incomes, Lipman added.

The exact size of the increases varies by provider, and the impact felt by any ratepayer will ultimately depend on how much natural gas they use.

South Jersey Gas customers face the largest raw increases, and a typical ratepayer can expect to pay $31.49 more for gas during the winter months under the new rates, an 18.6% hike.

Elizabethtown Gas’s typical ratepayer can expect their winter bills to rise by $25.33 per month (22%), and a typical New Jersey Natural Gas customer’s bill will jump by $21.01 per month (15%).

Monthly rates for the average PSE&G customer are set to increase by $24.77 per month (24.55%). The BPU on Wednesday approved a separate increase related to the board’s conservation incentive program that will see ratepayers pay an additional $30.38 per year.

Environmental advocates say the price increases are unnecessary, fueled only by the state’s energy master plan, which calls for a full transition to clean energy sources by 2050.

“If you look at the market, they don’t need it, but they’re smart businessmen. They know we’re getting off gas, so they’re trying to make a buck as quickly as possible,” said Dave Pringle, a member of anti-fossil fuel coalition Empower NJ. “It’s going to make people hurt, but a benefit would be the more expensive gas is, the faster we can get off fossil fuels.”

The board approved some cost reductions on Wednesday, but those were comparatively small. The largest adjustment will be for typical Elizabethtown Gas customers, who will see their increases moderated down by $1.93 per month.

Future declines possible

There is a silver lining for consumers. Because the rates were approved on a provisional basis, consumers will see refunds if natural gas prices decline, but market uncertainty has made forecasting natural gas prices something of a fool’s errand.

“It’s very difficult to say right now with certainty that that’s how much they need,” Lipman said. “This is the price of what the gas companies are paying for the gas … The price of gas, we’ve looked at it, and the day they filed, it was price x. The day we looked, it was price y. The day staff ran their numbers, it was z. And they were all very radically different numbers.”

Still, the increase in gas rates is likely to push electricity costs upward, as many electricity providers generate power by burning natural gas, but those hikes are expected to be relatively moderate, Lipman said.

New Jersey’s gas utilities only make money from delivering gas to their customers through local systems, and the increases won’t increase their earnings. They’ll just pass the cost of rising gas prices onto consumers, something the law allows.

The increases come after months of skyrocketing inflation that has already stretched some residents’ pocketbooks thin and are fueled largely by a spike in natural gas prices over the last year.

In December, a million BTU of natural gas cost $3.76, according to the Energy Information Administration. By August, that cost had more than doubled, rising to $8.81 per million BTU, the highest price since July 2008.

BPU commissioners earlier this month signaled Russia’s invasion of Ukraine had exacerbated natural gas price concerns, and it’s unclear whether damage to the Russian Nord Stream I and II pipelines will further increase gas prices in the coming months. That damage has already inflamed energy fears in European countries as winter approaches, and Lipman said supply shortages could drive prices up yet further if they persist in the long run.

The rising rates may create problems for utility providers too. Some gas providers launched capital projects to improve or maintain natural gas delivery systems while natural gas prices were low in recent years.

New Jersey Natural Gas, for example, last year won approval for a $150 million project to make improvements to its natural gas infrastructure that included fail-safes for flood-prone areas. The five-year project was expected to raise rates by $28 over its lifetime, a far harder sell now that consumers face similar hikes over a single year.

“We’re kind of paying the piper now, and I’m very concerned about future infrastructure projects and how we’re going to pay for them, and the ones that we’ve already agreed to because gas prices were low,” Lipman said.