Folsom-based South Jersey Gas received state approval this week to lower the average natural gas bill by 3.2 percent a month, but this time the rate reduction is unrelated to low wholesale prices of the fossil fuel.
During last year’s cold winter, customers used more gas for heat.
Through the Conservation Incentive Program — used to help stabilize rates based on seasonal weather fluctuations — this means monthly residential bills will drop starting Oct. 1.
The natural gas utility, a subsidiary of energy services holding company South Jersey Industries, says the reduction will decrease the average 100-therm residential bill to $128.31 a month, or $4.22 less per month.
Conversely, the program can add to natural gas rates some years, which happened in 2012 following an unusually warm winter.
For investors, the program eliminates a link between the company’s profits and the volume of natural gas it sells, South Jersey Gas spokesman Dan Lockwood said.
Rutgers University’s Climate Lab said the monthly mean temperature in New Jersey was particularly colder this February and March than the year prior.
March’s mean temperatures were 38.5 degrees, lower than average and much lower than the 49.8 degree average in March of 2012.
The state Board of Public Utilities approved the rate change on Wednesday while also approving about $117 million of accelerated infrastructure investments the utility has already made, including replacing bare steel and cast iron mains.
South Jersey Gas has another request to the BPU for more infrastructure work in storm-prone areas, particularly along the barrier islands of Cape May and Atlantic counties.
That request, filed earlier in September, is pending.
The utility sustained very little damage from Hurricane Sandy, which did not hit its service territory as hard as it did in more northern areas, such as Ocean County.
In a statement issued earlier this month, South Jersey Gas President Jeffrey DuBois said the request seeks to build greater resiliency in systems during major storms.
“The focus of our program would be on areas most susceptible to storm damage — along the barrier islands of Atlantic and Cape May counties,” he said.
In its proposal, the utility says it wants to spend $280 million over seven years to upgrade low pressure systems along barrier islands, which it says are more susceptible to water damage from major storms and floods.
Lockwood said the proposal would primarily involve work in Atlantic City, upgrading to high pressure systems to decrease the likelihood of water intrusion.
South Jersey Gas has about 350,000 residential, commercial and industrial customers in South Jersey, including Atlantic, Cape May and Cumberland counties. The utility has benefited from the cost of natural gas, which dropped following massive U.S. production.
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