I/M/O the Petition of Public Service Electric and Gas Companyís 2003/2004 Annual
Basic Gas Supply Service (BGSS) Commodity Charge Filing for its Residential Gas Customers Under its Periodic Pricing Mechanism and for Changes in the Gas Tariff Pursuant to N.J.S.A. 48:2-21 and N.J.S.A. 48:2-21.1 Gas
BPU Docket No. GR03050400

New Brunswick, New Jersey

August 11, 2003 

Good evening.  My name is Elaine A. 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 service.

Public Service Electric & Gas Company ("PSE&G" or the "Company") filed an initial Petition on May 30, 2003 with the New Jersey Board of Public Utilities ("Board" or "BPU"), requesting approval to increase its Basic Gas Supply Service ("BGSS") charge beginning October 1, 2003.  On July 16, 2003 the Company subsequently filed an additional motion, requesting: (1) that its USF and Lifeline rates be implemented, as per Board Order, on August 1, 2003; and (2) that the implementation of its proposed BGSS rates, subject to refund, would be effective as of September 1, 2003.

BGSS Increase

During the past year natural gas prices have increased substantially, resulting in all New Jersey natural gas utilities requesting substantial increases to cover their costs of purchasing natural gas.   PSE&G has asserted that it filed its amended petition and emergent motion as a result of this volatility.

The Company states that as of October 2004, PSE&G will have under-recovered gas costs totaling approximately $100 million. The Company has requested permission to increase the BGSS charge effective September 1, 2003, in order to avoid, or at least mitigate, additional under-recoveries.  If the full increase were to be approved, the average residential heating customerís bill would increase by approximately 7%, meaning that the monthly bill for residential heating customers would increase by about $8.00.  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 and the Staff of the Board of Public Utilities will continue their comprehensive review in order to provide the Administrative Law Judge and the Board with accurate information regarding PSE&G's final BGSS rate.


Universal Service Fund and Lifeline Charges

On July 16, 2003, the Company filed a Motion with the Board to implement the Interim Universal Service Fund factor, which is included in its 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 Board has already approved the Company's proposed USF factor of 0.2236 cents per therm including tax to recover costs associated with the Interim USF program.  The approximate charges to natural gas customers on a statewide basis for the permanent program will be 0.2466 cents per therm including tax for the USF program and 0.5378 cents per therm including tax for the Lifeline program. The combined amount of 0.7844 cents per therm including tax will result in an approximate 0.9% increase to the average residential heating customer, or approximately $12.00 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 request 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 PSE&G'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 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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