Rate Case Roundup: New Jersey

In another natural gas LDC rate proceeding, the New Jersey Board of Public Utilities approved a proposed settlement under which the LDC, South Jersey Gas Company, was granted a little more than half of what it originally requested. Thus, out of the $74.9 million in additional revenues sought, the company was allowed to increase its rates by $39.5 million.

As had been the case in Indiana, the New Jersey LDC averred that it needed rate relief to account for major capital investments it had made since its last base rate docket in 2013. South Jersey Gas maintained that while it has made significant progress in repairing, improving, and/or replacing critical sections of its infrastructure, more work remains to be done. It thus contended that it was imperative that it be permitted to raise its rates to enable it to continue to access capital at a reasonable cost.

Consistent with that goal, the negotiating parties had arrived at a ROE of 9.60%, translating into an overall return of 6.7975%. Besides the new ROE and overall return values, the board said that the stipulation encompassed an adjustment for consolidated federal income taxes. The new rate schedules also reflect a roll-in of three categories of cost that previously had been recovered via separate charges. Those three relate to the LDC’s conservation incentive program, its storm hardening and reliability initiative, and its accelerated infrastructure replacement project. The board reported that, on a combined basis, the three riders covered more than $17 million.

In accepting the terms of the proposed agreement, the board observed that despite the new rates causing the average residential customer to incur a billing increase exceeding $110 on an annualized basis (a rise of nearly 12%), the parties had shown the new revenue requirement established for the LDC to be just and reasonable. Re South Jersey Gas Co., BPU Docket No. GR17010071, OAL Docket No. PUC 3261-17, Oct. 20, 2017 (N.J.B.P.U.).