Status: All residential customers in the
State are allowed to choose natural gas suppliers. |
Overview: Since January 1, 2000, all
residential gas customers of the four local distribution companies in New
Jersey (Elizabethtown Gas, New Jersey Natural Gas, Public Service Electric
and Gas, and South Jersey Gas) have been able to choose their own gas
suppliers. In 2004, 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 September 2007, however, only 46,748
residential customers, or less than 2 percent of the State's residential gas
consumers, were buying natural gas from marketers compared with 133,226 in
November 2004. Still, more customers were participating than in 2005 and 2006, when residential enrollment totaled about 33,327 and 37,586, respectively. The sharp increase in natural gas prices during 2005 made
it difficult for marketers to honor their contracts with consumers, and
South Jersey Energy, 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, of the circumstances under which service can
be terminated. South Jersey Energy began serving residential customers again in 2006 after initiating a price protection service that locks in prices through December 2007. Ten marketers are licensed to serve
residential customers in the State. Commercial and industrial customers in
New Jersey have had unbundled service since early 1995. |
EIA State Data: In 2006, New Jersey had 2,578,191 residential and 227,819 commercial customers. They consumed 197 and 153 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 $15.33 and $12.98 per thousand cubic feet, respectively. Natural gas sales by marketers are included in the average price paid by residential customers. |
Eligibility and 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. |
Eligibility and Participation by Customer Class, December 2007
Customer Type |
2006 Customer Total |
Eligible December 2007 |
Participating December 2007 |
Total |
Percent
of Customers |
Total |
Percent
of Eligible
|
Percent
of 2006 Customer Total |
Residential |
2,578,191 |
2,581,066 |
100 |
46,748 |
1.8 |
1.8 |
Commercial/
Industrial* |
236,065 |
215,284 |
100 |
25,808 |
12.0 |
10.9 |
Total |
2,814,256 |
2,796,350 |
100 |
72,556 |
2.6 |
2.6 |
*New Jersey had 227,819 commercial and 8,246 industrial customers in 2006.
Source: 2006 Customer Total: Energy Information Administration, Natural Gas Annual 2006 (October 2007). Eligibility and Participation: New Jersey
Board of Public
Utilities (March 2008). | |
|
Eligibility and Participation by Local Distribution Company, September 2007
Local Distribution
Company |
Number of Customers |
Residential |
Non-Residential |
Eligible |
Participating |
Eligible |
Participating |
Elizabethtown Gas |
249,155 |
700 |
18,313 |
2,654 |
NJ Natural Gas |
445,088 |
9,229 |
33,159 |
4,928 |
Public Service Electric and Gas |
1,577,061 |
13,012 |
141,774 |
14,991 |
South Jersey Gas |
309,762 |
23,807 |
22,038 |
3,235 |
Total |
2,581,066 |
46,748 |
215,284 |
25,808 |
Source: New Jersey Board of Public
Utilities (March 2008). | |
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. |
Regulatory and Legislative Actions
Legislation |
02/03 |
Government Energy
Aggregation, A-2165, P.L. 2003. Revises the process for
governmental energy aggregation by allowing “all-in/opt out” tool, with the intent of making it easier to negotiate lower energy
rates. If a municipality forms an energy pool, it 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. |
|
02/99 |
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 to 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 |
11/07 |
Proposal to Allow Marketer Access to LDC Customer Information. The Board issued a request for comments to all interested parties concerning a procedure to allow local distribution companies (natural gas and electric) to release customer account information to third-party energy suppliers or clean power marketers. |
|
07/06 |
Comments Requested on Marketer Price-Reporting Requirements. The Board seeks comments on price-to-compare procedures that would allow customers to compare marketer and utility price offerings. |
|
11/04 |
Ownership Transfer Approved for
Elizabethtown Gas. The Board approved
the request for AGL Resources to acquire NUI Utilities Inc., doing
business as Elizabethtown Gas Company. |
|
06/03 |
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 “all-in/opt out” of the program. Nonresidential customers would be required to
opt-in. |
|
09/02 |
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. |
|
04/02 |
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. |
|
01/02 |
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 Board of Public Utilities 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 Board 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 Board 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. |
|
06/01 |
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. |
|
09/00 |
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. |
|
01/00 |
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. |
|
09/99 |
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.
|
|
06/99 |
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.
|
|
06/99 |
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. |
|
05/99 |
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. |
|
05/99 |
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. |
|
06/99 |
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. |
|
05/99 |
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. |
|
03/99 |
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. |
|
03/99 |
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.
| |