New Jersey’s 3 million natural gas customers have something to look forward to this winter: lower heating bills. The Board of Public Utilities today approved the largest reduction in natural gas prices in state history, with cuts ranging from 23 percent to 37 percent depending on the provider. The new prices go into effect immediately and should save the typical household between $262 and $477 a year, the board said. “It’s good news for all of us,” BPU Commissioner Frederick Butler said after today’s unanimous vote. “It’s good news for New Jersey, especially in this type of economy.
The rate cuts affect all four of the state’s natural gas providers: Public Service Electric & Gas, New Jersey Natural Gas, South Jersey Gas and Elizabethtown Gas.
A typical New Jersey homeowner uses 1,000 therms of natural gas — a standard measure of heat — and last year paid between $1,670 and $1,742 for their annual bill.
PSE&G, the state’s largest utility, will now charge 89 cents a therm, compared to $1.19 last year. That should translate into an average savings of $262 for a typical homeowner.
Customers of Elizabethtown Gas should save $477 a year on gas compared to last year, while those who buy gas from New Jersey Natural Gas should save $365 and South Jersey Gas customers, can expect to save $325.
Overall, the reductions approved should save natural customers more than $500 million a year, the board said.
The price reductions stem from several factors: the weak economy, which has hurt industrial output, as well as penny-conscious customers and a surge in natural gas supplies. In the last three years, U.S. natural gas supplies have increased about 7 percent, with 59 billion cubic feet extracted from the ground in 2008 compared to 55 billion cubic feet in 2007, according to the Energy Information Administration.
While that may not sound like a large increase, it is the first upward tick in supply in years and should result in record amounts of natural gas in storage at the height of the heating season.
Prices nationally have fallen about 75 percent since July 2008 and are expected to remain low for the immediate future, barring unexpected disruptions or global developments.
“Certainly there could be short term periods where prices, particularly in some regions of the country, move significantly higher, but we don’t expect sustained periods of upward price movement,” said Kobi Platt, an EIA economist.
Some New Jersey residents said the anticipated savings would allow them to spend money on simple luxuries they haven’t been able to afford in recent months, such as going out to dinner.
“While it’s not a drastic change to my monthly budget, any extra money is certainly appreciated,” said Amy Levitt, 32, of Oradel, a PSE&G customer. “We’ve definitely cut back on things like eating out, but now that (money) pays for maybe two extra nice meals that we wouldn’t have done before. I think it’s fantastic.”
Consumers are also in line for additional energy savings next year, when the board resets electricity prices because utilities are paying less for the fossil fuels they use to generate electricity.
May said it’s likely that electricity prices will decline when the board auctions off the right to sell power to residents and businesses for the next three years in February. Those savings won’t show up until June.
The Energy Information Agency expects wholesale electricity prices in the U.S. to decline through the end of this year. The shift began last year, when power consumption fell 1.6 percent. Government forecasters see consumption falling another 2.7 percent this year.
“Lower wholesale gas prices are one consumer benefit of today’s tough economic climate,” said PSE&G Vice President Mark Kahrer. “Our customers can certainly use this good news.” Star Ledger.