SJG Files to Reduce Rates by 20 Percent

PRESS RELEASE FROM SOUTH JERSEY GAS:
FOLSOM — South Jersey Gas has proposed a rate reduction with that would save residential customers a total of 20.2 percent on their gas bills.
SJG today filed its Basic Gas Supply Service petition with the New Jersey Board of Public Utilities, proposing a rate decrease of $0.22 per therm, or 13.3 percent, for residential heating customers, as well as a BGSS credit of $20 million to all customers’ bills in October. The credit equates to a 5 percent reduction. SJG also filed its annual Conservation Incentive Program petition, requesting a $0.03 per therm, or 1.9 percent rate reduction. If approved, a residential heating customer will save $25.42 on a 100-therms monthly natural gas bill as a result of the BGSS and CIP rate reductions. In addition, residential heating customers will receive a BGSS credit of approximately $68 in October.
“With the BGSS and CIP reductions in place, a homeowner who switches to natural gas from oil would realize significant savings. Based on July futures price for oil at $66 per barrel, SJG’s equivalent price of natural gas would be $49.04 or 25.7 percent less. This summer is a perfect time to switch to natural gas as the installation will be completed prior to the start of the winter heating season,” said South Jersey Gas President and CEO Edward J. Graham
The BGSS clause serves as a method to pass along increases and decreases in gas costs directly to customers; therefore, SJG’s income is not affected by BGSS rate adjustments. The company is able to provide the rate reduction and credit for two reasons. First, SJG received approval to release pipeline capacity, the cost of which was previously paid by customers. Second, the cost of natural gas is lower now than a year ago. Natural gas prices in 2008 were about $11 per dekatherm compared with the current price per dekatherm of about $4. SJG forecasts commodity prices remaining in the range of $4 to $6 over the next year.
Graham stated, “We monitor natural gas prices daily and were able to secure lower priced gas, giving us the ability to provide a rate reduction and credit this year. We chose to split the reduction and provide a bill credit during October rather than spreading the entire reduction over a 12-month period. Receiving a lump sum credit will result in many customers having a very minimal payment or no payment at all in October, which will allow them to use their money for other expenses.” Graham added, “SJG’s BGSS rate has not been this low since 2003.”
In October 2006, the NJBPU approved SJG’s pilot CIP program, which encourages customers to use natural gas more efficiently by educating them about measures they can take to reduce natural gas consumption. The program also benefits investors by eliminating the link between the company’s profits and the quantity of natural gas it sells. The proposed reduction in the CIP rate is due to winter weather impacts on revenue. Since the inception of the CIP program, customers saved approximately $79 million and almost $23 million of SJG’s net income was protected.
South Jersey Gas is the principal subsidiary of South Jersey Industries (NYSE:SJI) and provides natural gas service to more than 340,000 residential, commercial and industrial customers in Atlantic, Cape May, Cumberland, Salem, and significant portions of Gloucester, Burlington and Camden counties in New Jersey. Visit http://www.southjerseygas.com to learn more about South Jersey Gas and its programs.