Wholesale electricity costs will drop in June, shaving $3.35 off monthly residential electric bills in southern New Jersey, the state Board of Public Utilities announced Thursday afternoon.
This would reduce the average bill 3 percent to $114.65 for Atlantic City Electric customers using 650 kilowatt hours per month, the standard industry measure.
The lower cost resulted from the state’s 11th annual energy auction, which took place over four days earlier this month and was approved by the BPU on Thursday.
The state’s four major electric utilities will pass on the reduction in energy prices directly to customers, a state requirement.
BPU President Robert Hanna attributed the price drop to increased production of natural gas.
“Our analysis is we are benefiting from the drop in natural gas prices, and that is a very welcome trend for our New Jersey ratepayers,” Hanna said in a conference call.
In January, natural gas prices reached their lowest levels in nearly a decade, the Associated Press reported last month.
The wholesale price of electricity represents about two-thirds of an Atlantic City Electric customer’s bill. This price is passed on directly to users, meaning utilities do not profit from rises and falls in how much they pay suppliers.
The remainder of the typical bill is the distribution charge, which is what utilities charge to deliver electricity.
Atlantic City Electric, a subsidiary of Pepco Holdings Inc., services 547,000 customers in southern New Jersey.
Other electric utilities will see various decreases when new rates take effect June 1.
As a result of the auction, the BPU said, bills should drop 6.4 percent for Jersey Central Power and Light; 3.6 percent for Public Service Electric and Gas; and about 1 percent for Rockland Electric.
The auction drew 17 bidders, compared to 13 last year, Hanna said.
Eleven bidders won, including Conoco Phillips Co., Citigroup Energy Inc., Hess Corp., NextEra Energy Power Marketing LLC, and J.P. Morgan Ventures Energy Corp., the BPU said.
“The board’s main concern with the auction process is that it is sound, fair, transparent and that everybody knows the rules. We have features in it designed to do just that,” Hanna said.
Hanna, a member of Gov. Chris Christie’s Cabinet, was named president of the BPU in December after former President Lee Solomon left the post.
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