Retail Unbundling - New Jersey
|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 August 1, 2009, however, only 59,207 residential customers, or slightly more than 2 percent of the State's residential gas consumers, were buying natural gas from marketers compared with 133,226 in November 2004. Nevertheless, participation has steadily increased since 2005, with residential enrollment totaling about 33,327 in 2005, 37,586 in 2006, 46,748 in 2007, and 56,494 in 2008. 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 locked in prices through December 2007. The company instituted a similar plan in 2008 for existing residential customers and planned to expand the program to include new customers in 2009. However, the company stopped enrolling residential customers in 2009. As of December 2009, 10 marketers have licenses 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 2008, New Jersey had 2,601,051 residential and 229,235 commercial customers. They consumed approximately 220 and 169 billion cubic feet of natural gas, respectively. The average prices residential and commercial customers paid for natural gas from local distribution companies were $15.21 and $13.38 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, 2009
|Eligibility and Participation by Local Distribution Company, August 2009
|Regulatory and Legislative Actions
on Retail Unbundling|
Summary: The strong customer response to some of the pilot programs 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|