I/M/O the Petition of South Jersey Gas Company to Change
the Level of its Basic Gas Supply Service Charge
BPU Docket No. GR03050413

Voorhees, New Jersey
August 13, 2003

     Good evening.  My name is Elaine Kaufmann, and I am an attorney representing the New Jersey Division of the Ratepayer Advocate.  Our office was created by the New Jersey Legislature to represent ratepayers in cases such as this where a utility seeks an increase in rates or change in services.


BGSS Rate Increase

South Jersey Gas Company (SJG or the Company) filed an initial Petition (“Initial Petition”) with the New Jersey Board of Public Utilities (“Board” or “BPU”) on May 30, 2003.  The Company requested an increase in its Basic Gas Supply Service (BGSS) charge from $0.7867 per therm (including tax) to $0.8987 per therm (including tax), to be effective October 1, 2003.  In an updated Petition (“Petition”) filed July 7, 2003 with the Board, the Company requested approval to implement its BGSS charge beginning September 1, 2003 from the current level of $0.7867 per therm (including tax) to $0.9017 per therm (including tax).

According to the Company, this is necessary because the increased prices for natural gas prevent the Company from recovering its commodity cost under its current rate.  The Company states that by August 31, 2003, South Jersey will have under-recovered gas costs totaling approximately $1.9 million, in addition to the under-recovered gas costs of $20.3 million that is currently recoverable through the Gas Cost Under-recovery Adjustment (GCUA) clause.

With this rate increase, the average residential heating customer bill would increase by approximately 9.3%, meaning that the average monthly bill for residential heating customers using 100 therms per month would increase by about $11.50.  The Ratepayer Advocate is fully aware of the current price volatility in the gas market that is having a profound impact on all classes of ratepayers. However, this office will continue its comprehensive review prior to a final determination and order by the Administrative Law Judge and the Board of Public Utilities regarding the Company’s final BGSS rate.

Universal Service Fund and Lifeline Charges

On July 16, 2003, the Board ordered the New Jersey natural gas utilities to implement the Interim Universal Service Fund factor, which has been included in the Company’s Societal Benefits Clause ("SBC"). The Company's SBC includes, but is not limited to, collection of charges for the statewide Universal Service Fund ("USF") and Lifeline programs. Both of these programs were established by the Board to assist qualifying low-income individuals with their energy bills.

The Company is proposing to establish its USF factor to recover costs associated with both the permanent USF program and an existing interim USF program. The approximate charges to natural gas customers on a statewide basis for the permanent program will be 0.2326 cents per therm (pre-tax) for the USF program and 0.5074 cents per therm (pre-tax) for the Lifeline program. The combined amount of 0.7400 cents per therm (pre-tax) will result in an approximate $9 increase to the average residential heating customer annually.


Our office is conducting a complete investigation of the Company’s request based upon the information that is being supplied and updated by the Company.  We have retained the services of an expert consultant to assist us in our review.   The Ratepayer Advocate’s inquiry is focused on the critical issues of whether the Company’s proposal allows ratepayers to pay the lowest rates possible consistent with receiving safe, reliable and proper service.  The New Jersey Board of Public Utilities, with legal submissions from the parties, including the Ratepayer Advocate, will make the final decision regarding the utility’s requests for and adjustment to its BGSS charge.

The purpose of this hearing is for you, the customer, to voice your opinion, relate your experiences and offer comments about your Company’s rates and service.  It is important that you express your views so they may become part of the record on which the Administrative Law Judge and the Board of Public Utilities make their decisions.  The Ratepayer Advocate also needs to hear your views.  Your active participation is strongly encouraged to help in our evaluation of the Company’s proposals and our preparations for the evidentiary hearings.

This hearing is being transcribed and your comments will become part of the record.  I would like to reiterate the importance of your participation so that the Ratepayer Advocate can have a clear record of your concerns and interests.

On behalf of the Ratepayer Advocate, thank you for attending tonight’s hearing.

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