The Star-Ledger

Homeowners Facing Huge Heat Increases

The Star-Ledger — Saturday, May 31, 2008

BY TOM JOHNSON
Star-Ledger Staff

Turning up the heat in your home this winter may be as painful as a trip to the pump.

The state's four natural gas utilities would boost rates for residential customers by as much as 22 percent, or an average of $32 a month, under plans filed yesterday with the state Board of Public Utilities. The rates would take effect Oct. 1.

The spike in winter heating bills is blamed on rising international demand for natural gas, a significant drop in imports of liquefied natural gas and lower supplies in the U.S. Those factors have combined to double the price utilities pay for the fuel since last August. Utilities such as Public Service Electric & Gas make no profit on the sale of natural gas, passing the costs through to customers.

A jump in natural gas prices will only add to the pain for consumers.

# Crude has retreated from its record highs earlier in the week, but the average price of gasoline in New Jersey yesterday was still $3.847 a gallon, according to AAA, and some filling stations are charging more than $4.00.

# Heating oil customers are being told by providers that they may have to pay as much as $4.75 a gallon this winter, double last year.

# Effective tomorrow, new electric rates take effect in New Jersey that will increase the typical residential customer's bill by between $11 and $18 per month.

"I don't know how much more consumers can absorb," said Ev Liebman, program director for New Jersey Citizen Action.

Utility executives said they tried to cushion the spike in bills by locking in lower prices for natural gas early in the year when prices are usually lower.

For instance, New Jersey Natural Gas, which is seeking an 18 percent boost in its rates, said its request could have been 13 percent higher if it had not already secured more than half of the gas it needs for the upcoming heating season, according to Mark Sperduto, vice president of regulatory affairs.

"We realize that many of our customers are dealing with the effects of an economic downturn and that rising energy costs are a major aspect of that," he said. "We will continue to do everything we can to minimize the impact of the increase in natural gas costs and encourage our customers to do the same through conservation efforts."

That message, however, is beginning to ring hollow for consumers. Joe Fleischner, a retiree who lives on his pension in Budd Lake, was told that his heating oil bills would double if he accepted delivery last week.

"I don't think seniors need to be told to lower their thermometers. I've already done that," Fleischner said. "We'll get smaller deliveries, turn off the heat in the daytime, and go hang out at the Rockaway Mall. At 64, I've become a mall rat."

The natural gas filings can be modified by the state regulatory agency, but it typically just approves the petitions as filed when it deals with the commodity price.

"We obviously are going to look at it very closely, but you've got four companies coming in at pretty much the same cost. Everything is pointing to this is where the market is," said Victor Fortiewicz, executive director of the BPU.

The utilities make their profit by delivering gas and electricity through their pipes and wires.

Given the wild run-up in natural gas futures, consumers are bound to pay more this winter, said Dave Brown, vice president of NUS Consulting, which advises businesses on ways to manage utility costs. "It's all part of the run-up in energy commodities," he said.

David Daly, a vice president at PSE&G, which is seeking a 20 percent increase, or a $28.60 boost in monthly bills, noted the forecast for wholesale gas prices are more than 60 percent higher than for last winter.

"It's a period that's unprecedented and we're doing our best to work through it," Daly said.

In addition to PSE&G and NJ Natural Gas, Elizabethtown Gas asked for a 22 percent increase, and South Jersey Gas for 18 percent.

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