Status: All residential customers in the State are allowed to choose natural gas suppliers.
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Overview: Since January 1, 2000, all residential gas customers of the four local distribution companies in New Jersey (NUI/Elizabethtown, New Jersey Natural Gas, Public Service Electric and Gas, and South Jersey Gas) have been able to choose their own gas suppliers. A year ago, about 5 percent of the State's residential customers were buying gas from non-utility suppliers, nearly the same percentage as in 2003. As of November 2005, however, only 33,327 residential customers, or about 1 percent of the State's residential gas consumers, were buying natural gas from marketers compared with 133,226 in November 2004. The sharp increase in natural gas prices during 2005 made it difficult for marketers to honor their contracts with consumers, and South Jersey Energy Supply, an affiliate and major supplier in South Jersey Gas Company's service area, returned its customers to regulated utility sales service. According to State licensing requirements for marketers, customers must receive written notice at least 30 days in advance that a supplier intends to terminate service and be informed, as part of the customer contract, the circumstances under which service can be terminated. In total, four marketers are offering services to residential customers in the State. Commercial and industrial customers in New Jersey have had unbundled service since early 1995.
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EIA State Data: In 2004, New Jersey had 2,582,714 residential and 223,595 commercial customers. They consumed 233 and 169 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $11.56 and $10.94 per thousand cubic feet, respectively.
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Eligibility/Participation in Retail Choice Programs: All residential gas customers may choose their own gas supplier. Three of the four LDCs serving New Jersey previously offered pilot programs for retail unbundling, beginning in 1997. New Jersey Natural Gas offered a pilot program to 5,000 customers and South Jersey Gas to up to 10,000 customers, while Public Service Electric and Gas (PSE&G) offered its pilot program in only a small portion of its service area. PSE&G ultimately terminated its pilot because of the small amount of customer participation (fewer than 1,000 customers). However, both the New Jersey Natural and South Jersey pilot programs were oversubscribed and enlarged.
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Status as of December 2005: Number of Customers
Customer
Type |
Total
2005 |
Eligible |
Participating |
Total |
Percent of
2005 Total |
Total |
Percent of
Eligible |
Percent of
2005 Total |
Residential |
2,434,327 |
2,434,327 |
100 |
33,327 |
1.4 |
1.4 |
Commercial/ Industrial |
256,604 |
256,604 |
100 |
20,795 |
8.1 |
8.1 |
Total |
2,690,931 |
2,690,931 |
100 |
54,122 |
2.0 |
2.0 |
Note:
Participation percentages based on EIA customer counts for 2004 are 1.3
percent for residential customers, 8.9 percent for commercial/industrial
customers, and 1.9 percent for the total (see U.S. Summary table).
Source:
New Jersey Board of Public
Utilities. |
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LDC Customer Data as of November 30, 2005
Local Distribution
Company |
Number of Customers |
Residential
|
Non-Residential |
Eligible
|
Participating |
Eligible |
Participating |
NUI Elizabethtown Gas |
246,397 |
98 |
20,665 |
2,321 |
NJ Natural Gas |
431,803 |
11,503 |
32,412 |
3,656 |
PSE&G |
1,461,057 |
10,771 |
182,051 |
12,988 |
South Jersey Gas |
295,070 |
10,955 |
21,476 |
1,830 |
Total |
2,434,327 |
33,327 |
256,604 |
20,795 |
Source: New Jersey Board of Public
Utilities. |
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New Jersey: Regulatory and Legislative Actions on Retail Unbundling
Summary: The strong customer response to some of the pilot programs that were initiated in 1997 led the State legislature to enact the "Electric Discount and Energy Competition Act" on February 9, 1999, which called for statewide unbundling of the natural gas industry by December 31, 1999. In January 2000, the Board of Public Utilities approved rate unbundling filings for all four of the State's LDCs, which included incentives for residential customers to switch to third-party suppliers. The billing structure (including who will prepare and send bills) for natural gas customers follows the electricity sales billing model. In September 2000, the Board approved measures that allow enrollment in customer choice programs through the Internet. Previously, a customer's written signature was required before any change could be made and Internet enrollments were limited to 10 percent. The Board's action is in keeping with the Electronic Signatures in Global and National Commerce Act (effective October 2000), which puts Internet transactions on a par with paper transactions
The 1999 legislation also required the Board to determine by January 2002 whether to make competitive basic gas supply service (BGSS) available to any gas supplier or gas utility. On January 17, 2002, the Board ruled that the market was not yet ready for a competitive BGSS structure but encouraged the formation of utility-specific pilot programs subject to certain guidelines. These guidelines include use of a 2-year minimum term, inclusion of at least 25 percent of residential and small commercial customers in the pilot, supplier access to interstate capacity and storage, and uniform pricing for all customers within the same rate class categories and no subsidization.
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Regulatory and Legislative Actions
Legislation |
2/03 |
Government Energy
Aggregation, A-2165, P.L. 2003. Revises process for
governmental energy aggregation by allowing “all-in/opt out” tool, with
intent of making it easier to negotiate lower energy rates. If
municipality forms an energy pool, allows all residential customers to be
included unless they choose to opt out of the program. Suppliers would
have better knowledge of the size of the energy pool, which will simplify
rate negotiations. Municipalities will be able to obtain load profile and
other customer information in electronic format. |
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2/99 |
The Electric
Discount and Energy Competition Act, P.L. 1999. Opens up the State energy industry to
competition, mandating restructuring of electric utilities by August 1999
and gas utilities by December 31, 1999. Utilities are to be given the
opportunity to recover prudently incurred stranded costs. The Board of
Public Utilities is to oversee the restructuring process and define
standards for fair competition, gas affiliate relations, accounting and
reporting, and third-party supplier licensing, safety, and service
quality. Gas and electric power suppliers must be licensed before they can
offer retail services. The act authorizes energy aggregation by private
and government entities. |
Regulatory Actions |
11/04 |
Ownership Transfer Approved for Elizabethtown
Gas. PSC approved request for AGL Resources to acquire
NUI Utilities Inc., doing business as Elizabethtown Gas
Company. |
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6/03 |
New Rules Adopted re Government Energy
Aggregation Programs. Rules include new
procedures and options directed at increasing participation in aggregation
programs. Local governments can include all local residential customers
unless the individual chooses to “opt-out” of the program. Nonresidential
customers would be required to opt-in. |
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9/02 |
Energy Competition Rules Re-adopted with
Amendments. Board reviewed its rules on energy competition,
interim environmental information disclosure standards, affiliate
relations, fair competition and accounting and reporting standards, and
interim government energy aggregation program standards.
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4/02 |
Approval of Transfer of PSE&G Interstate
Capacity Contracts to Newco, an Unregulated
Affiliate.Board ruled that Newco can provide the interstate
capacity, storage, and supply needed for PSE&G to provide basic gas
supply service. PSE&G will implement an optional capacity release
program to ensure that third-party suppliers can obtain capacity to
deliver to their customers on PSE&G's system if needed. The action
will move all nonresidential customers to market-based pricing and provide
the opportunity to consider similar pricing structures for residential
customers. The Division of Ratepayer Advocate had opposed PSE&G's
petition. |
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1/02 |
Board Decides Market Not Yet Ready for
Competitive Basic Gas Supply Service (BGSS). The Electric Discount
and Energy Competition Act specified that by January 1, 2002, the BPU must
determine whether to make BGSS available on a competitive basis to any gas
supplier, any gas public utility, or both. In an order (Docket GX01050304)
issued on January 17, 2002, the BPU declined to order competitive BGSS at
this time but directed the staff to form a gas policy group to examine
pricing and reliability issues that will affect the long-term structure of
BGSS. The BPU also decided that interested competitive suppliers and
utilities could pursue implementation of BGSS pilot programs subject to
certain guidelines. These guidelines include use of a 2-year minimum term,
inclusion of at least 25% of residential and small commercial customers in
the pilot, supplier access to interstate capacity and storage, and uniform
pricing for all customers within the same rate class categories and no
subsidization. |
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6/01 |
Inquiry into Approval of Competitive Basic Gas
Supply Service. Board requested comments on questions related to
its requirement to determine by January 2002 whether to adopt competitive
BGSS and directed staff to form working groups to discuss major relevant
issue. Comments are due by July 9, 2001, and working group feedback is due
by August 15, 2001. |
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9/00 |
Approval of Internet
Enrollment. Board approves Internet Pilot Program allowing NJ
consumers to select energy suppliers on the Internet. Until now, a
customer's written signature was required before any change could be made
and Internet enrollments were limited to 10
percent. |
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1/00 |
Approval of LDC
Unbundling Filings. The Board approved the rate unbundling filings of
the State's four LDCs: New Jersey Natural Gas Co., NUI Elizabethtown Gas,
South Jersey Gas Co., and PSE&G. The approved stipulations include
incentives, effective through 12/31/02, for residential customers to
switch to third-party suppliers. |
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9/99 |
Natural Gas
Supplier Licenses. The Board reminded gas suppliers providing retail
service as of 2/9/99 that they have until 9/10/99 to apply for a gas
supplier license or to submit a letter of intent, which must be followed
by a license application by 10/11/99. Failure to do so will result in the
company being unable to provide gas supply service in the State.
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6/99 |
Government
Aggregation Standards. Final 6/25/99. Sets standards for cooperative
purchasing of electric generation service and/or gas supply service,
required contract provisions, and conditions for providing government
aggregation programs. A government aggregator must allow (but not require)
participation by residential and business customers, but customers must
first provide written consent. A contract between a government aggregator
and third-party supplier must specify (1) specific responsibilities of the
parties, (2) charges, rates, formulas used to determine customer charges,
(3) procedures to obtain a customer's written consent, (4) proposed terms
of contract between customer and supplier, (5) aggregator resources
associated with services, (6) contract duration, (7) indemnification
provisions, (8) performance bond terms, and (9) compliance with Board
mandated consumer-protection provisions. A government aggregator may have
only one contract for either electric or gas service or both services for
consumers within their jurisdiction but not two contracts for the same
service. |
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6/99 |
Formation of
Natural Gas Implementation Working Group. The Board ordered gas utilities to form a working
group with third-party suppliers and consumer advocates to resolve
nonrevenue issues associated with retail gas competition, such as
enrollment, billing, data interchange, customer information, third-party
supplier agreements, nomination procedures, and reliability. The group is
to consider data exchange issues first, specifically the relevance of a
uniform electronic data interchange system. The group is to provide
recommendations to the Board when consensus is reached and identify any
unresolved issues by 10/15/99. |
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5/99 |
Licensing and
Registration Rule. Final 5/12/99. All third-party gas suppliers must
be licensed by the Board of Public Utilities, including those currently
providing service under pilot choice programs. Applications must include a
list of planned services by customer class, a sample residential contract,
evidence of creditworthiness, preceding 12-month historical data on NJ gas
sales, revenues, and volumes, and a surety bond of $250,000. When an
application is approved, the supplier pays an $800 licensing fee. The
license is valid for 1 year and must be renewed at least 30 days before
its expiration date. The licensee must comply with all mandated
reliability and safety standards and supply pipeline quality gas (heating
value of at least 1,000 Btu per cubic feet). Licensees must have a NJ
office, maintain records for 3 years of any customer complaints and
remedial actions, and comply with specific standards of conduct approved
by the Board. Within 6 months of receiving a license, the supplier must
provide the Board with the number of residential customers it serves in
NJ, by zip code. The rule also specifies the registration processes for
energy agents and private aggregators. |
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5/99 |
Consumer Protection
Standards. Final 5/12/99. Gas suppliers' TV and radio
advertising must provide a toll-free number where customers can get price
information and the LDC delivery area of the service. Marketing materials
must include the average price per therm for offered gas supply service,
exclusive of optional services, the time period of the offer, the average
price per therm for gas supply service for basic supply service by the LDC
during the same period, and the estimated percentage savings. Optional
service offerings must identify the separate charges. Service to retail
customers cannot occur without a customer's written signature on a
contract. The customer will receive notification of its supplier selection
and has 14 days to rescind the decision. Bills must separately itemize
charges for optional services and also identify separate charges of the
gas supplier and LDC if the customer chooses to receive one bill. May not
disclose any customer-specific information without customer's written
consent. In complaints, customers must be informed of alternate dispute
resolution procedures. |
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6/99 |
Restructuring
Filing Clarification. The Board clarified that the scope of the LDCs'
restructuring filings should allow analysis of all costs so as to identify
all gas supply-related costs and supply-related overhead, administrative,
and general costs. The Board directed companies to respond fully to
discovery requests within 10 days and changed the deadline for intervener
testimony from 7/16 to 7/22. |
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5/99 |
Anti-Slamming
Provisions. Final 5/12/99. Any change in a supplier must be
authorized by the customer and then verified. Authorization records are to
be kept by the supplier for at least 3 years. Unauthorized switching could
result in revocation of a company's license and in financial
penalties. |
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3/99 |
Standards. Order Releasing Draft Interim Standards for
Public Comment, Docket EX99030182. Proposed standards extend to both
electric and gas utilities and cover affiliate relations, consumer
protection measures, licensing of competitive energy suppliers,
anti-slamming measures, service reliability, and aggregation programs. A
utility may not give its affiliates (or affiliates' customers) any
preference in providing regulated services; may not tie regulated service
to any other product; and may not disclose any customer-specific
information (unless requested by customer). Utilities and affiliates must
be separate corporate entities with separate books and records and
separate offices and computer systems. Joint promotions or proposals are
prohibited and any use of a utility's logo by an affiliate in the State
must be accompanied by a disclaimer stating that the companies are
separate entities and that the affiliate is unregulated. Utilities cannot
provide competitive products or services without Board approval; these
services are limited to metering, billing, or administrative services and
those services related to customer and public safety and reliability.
Utilities can continue to provide previously-approved competitive services
as long as a public tariff is filed within 60 days of final adoption of
these standards. Gas suppliers must have an office in NJ and post bond. A
supplier may not switch a customer's service without the customer's
written permission. |
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3/99 |
Order Establishing
Procedures, Docket GX99030121.The Board established
procedures to implement restructuring of the natural gas industry as per
the Electric Discount and Energy Competition Act. Gas utilities are
directed to unbundle gas rates and by April 30, 1999, file (with
supporting documentation) a proposed basic gas supply rate (by customer
class), a proposed billing credit for customers who receive billing
services from a third-party supplier, a "societal benefits charge" to
recover prudently incurred expenses, a proposed regulatory asset charge,
and a proposed transportation rate. Target hearing dates are set for
9/9/99 through 9/22/99.
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