New Jersey Natural Gas (NJNG) received approval from the New Jersey Board of Public Utilities (BPU) on the settlement of its base rate case and conclusion of its Safety Acceleration and Facility Enhancement (SAFE II) and New Jersey Reinvestment in System Enhancement (NJ RISE) programs, resulting in a $79.269 million increase to its base rates. NJNG requested the increase to recover costs associated with the responsible operation of its business, system enhancements and infrastructure investments, including an emission-reducing green hydrogen project, the Southern Reliability Link (SRL) and a new safety training facility.
“This is a reasonable, fair settlement that recognizes the value of the more than $800 million of investments we’ve made in our system and operations since 2019,” said Steve Westhoven, President and CEO of New Jersey Natural Gas. “These investments have significantly enhanced the reliability of our delivery system, driven down emissions and supported the critical operation of our lifeline utility service. We thank the Board of Public Utilities for their work in reaching an outcome that balances the interests of our customers and our company.”
After a thorough review by regulators, the settlement reflects a rate base of $2.523 billion, an increase in revenue requirement of $79 million, an overall rate of return of 6.84 percent and a composite depreciation rate of 2.78%.
The BPU also authorized a $269,000 rate increase related to SAFE II and NJ RISE investments through June 30, 2021, effectively concluding those programs. Approved in 2016 and 2014, respectively, SAFE II and NJ RISE replaced unprotected base steel main in NJNG’s pipeline network and enhanced system resiliency in the most storm prone areas of its service territory.
The approved rates include recovery of NJNG’s new emission-reducing green hydrogen facility. This cutting-edge project is the first of its kind on the East Coast to generate zero-carbon green hydrogen and blend that energy with natural gas on an existing distribution system serving customers. The project results in lower emissions from the energy NJNG delivers, without any change to the way its customers receive or consume energy.
Also included is the recovery of all capital investments related to the SRL and a new safety training facility. The SRL is a 30-mile transmission pipeline that significantly strengthens NJNG’s delivery system and provides greater reliability and supply diversity to customers at the southern end of its service territory. The training facility is a part of NJNG’s commitment to safety. It will provide mandated operator qualification and safety-related training, including classroom and simulated field activities for NJNG employees and third-party contractors, as well as training opportunities for local emergency personnel.
Separately, the BPU approved a 1.4% increase related to Basic Gas Supply Service (BGSS) recoveries. The BGSS represents the cost of the commodity that is passed through to customers. Any change to this rate does not result in a change in earnings for NJNG.
The new rates will go into effect on December 1, 2021.
As a result of the BGSS and base rate adjustments approved by the BPU, the typical residential heating customer using 100 therms a month will see an increase of $13.23, or 11.3%, on their monthly bill, from $117.05 to $130.28. Even with this change, customers’ bills are still 23.4% lower than they were in 2008.