Gas Company Raises Customer Rates, Shareholder Dividends

FOLSOM — After getting the go-ahead for a 9-percent rate hike, a local gas supplier rewarded its shareholders with a similar bump in dividends.
South Jersey Industries (SJI) – the parent company of South Jersey Gas, which provides natural gas to over 336,000 customers in Cape May and six other southern counties – announced a 10 percent increase in annualized dividends to in a Nov. 24 release.
The jump represents an 11-cent increase to $1.19 per share. Stockholders will see increases in their quarterly dividend payments from 27 cents to 29.75 cents per share.
According to a release, SJI has paid dividends for 56 consecutive years and has increased its dividend for the last 10 years.
“Our confidence in SJI’s performance for the remainder of 2008 and beyond supported the action by our board to announce a 10 percent dividend increase,” said company Chairman and CEO Edward Graham.
“An increase of this size represents a strong statement by SJI’s board and management regarding the current health and future prospects of the company.”
The release cited high performance from a number of SJI’s business lines, particularly the asset management and marketing, and the on-site energy production businesses.
Earlier in the month, SJI reported strong third quarter results with economic earnings growth guidance between 6 and 10 percent.
Three days before SJI announced its expanded dividends, the state Board of Public Utilities (BPU) approved a 9.2 percent increase in the company’s Basic Gas Supply Service (BGSS) rate. With this increase, the average residential gas customer will pay approximately $141.30 more annually.
According to a release, the BGSS increase is a way to pass along changes in wholesale gas costs to customers. As South Jersey Gas makes no profit on the sale of the natural gas commodity itself, it likewise will make no profit from this rate adjustment, the release stated.
In June, the company requested the BPU grant it an 18.2 percent rate increase, but recent decreases in gas prices has reduced its need.
“Since the spring of 2008, when we prepared our original request to the NJBPU, we have seen significant decreases in wholesale gas prices. We are pleased to reflect these lower prices in the BGSS rates approved today,” Graham stated.
“Because of our prudent purchasing practices and our Conservation Incentive Program, we can shelter our customers from the full impact of increased wholesale prices.”
The company has reduced its rates during the past two years saving its customers $36.7 million, plus an additional $50 million through its Conservation Incentive Program, a release stated.
SJI is traded on the New York Stock Exchange. At the closing bell on Nov. 25, it was selling for $37.90 per share.
Contact Hart at (609) 886-8600 Ext 35 or at: jhart@cmcherald.com