On March 29, the New Jersey Natural Gas utility (NJNG) filed a “rate case” seeking to get more money to invest in its natural gas delivery system. New Jersey produces no natural gas, yet the state gets over half its electricity from gas (nuclear power is the other primary generator in the state). Pennsylvania is New Jersey’s primary source of natural gas, and a significant amount of the gas going into New York and the rest of New England flows through New Jersey as well.
A “rate case” is the process that regulated utilities use to raise the rates they charge consumers. The process varies from state to state, but basically the utility has to ask for permission to raise its prices. The utility must put on a “case” to prove to a public commission that raising the rates is appropriate. The commission typically reviews the utility’s costs and allows them an appropriate profit and then approves the rates if they are in the public interest.
Here, NJNG says it is going to invest a total of $600 million in its transmission and distribution system. It is also seeking funds to complete the Southern Reliability Link, which is a 30-mile project that will provide new gas into Ocean County and better connectivity to interstate pipelines. Construction on the pipeline actually began last year, and it is expected to be operational this year.
Gas bills in New Jersey and many other states come with two main components. The first is a delivery charge, which includes the cost of upgrading and maintaining the pipeline system. The utilities earn their profit on this portion. The other part is the cost of purchasing the gas itself, and utilities are not supposed to profit on that part.
New Jersey has benefited economically from just being near the Marcellus Shale formation, as consumers are getting much cheaper gas and industry is finding its way back to the state. If you want to be a part of fueling New Jersey, you can talk to the smarter, better, faster land experts in Pennsylvania at Cimmaron Land.
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