Public Service Electric and Gas Company (“PSE&G”), a subsidiary of Public Service Enterprise Group Inc. , has made a filing with the New Jersey Board of Public Utilities. In the filing, the company has requested the Board to lower the winter natural gas bills additionally by 5.2% per month for its residential customers. If approved, the proposed gas rate reduction will be effective from October 1, 2012.
Per the request, a typical residential customer that utilizes 160 therms of natural gas in a winter month, or 1,050 therms per year, will save $9.08 per month amounting to annual savings of $59.56.
If the appeal is granted, it would mark the ninth consecutive rate decrease since 2009 bringing cumulative savings to $674. Due to plummeting market prices for gas, the company had lowered its residential gas bills for the eighth time for a typical residential customer by 4.6%, or approximately $8.53 per winter month, in November 2011. As a result, effective from December 2011, a typical residential gas customer had to pay a monthly bill of $173.97.
Additionally, as a result of the February Basic Generation Service auction that has been approved by the Board of Public Utilities, a reduction in electricity prices has come into effect immediately. Consequently, a typical PSE&G residential electric customer's monthly summer bill will be down 2.8% or $3.90 to $138.67. Yearly, it will be decrease by $49.52 or 3.6%.
A rate decrease is undoubtedly good news for the customers. The company asserts that it sells natural gas without making any profits. Also, we are encouraged by Public Service Enterprise Group’s robust portfolio of regulated and non-regulated utility assets that offer a steady earnings base and significant long-term growth prospects. Going forward, we expect the company’s growth to be driven by a low-cost nuclear fleet, assumed rate relief and added generating capacities.
However, the increasing cost of coal, higher pension & financial costs, and power-price volatility are areas of concern. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Newark, New Jersey, Public Service Enterprise Group is a diversified utility holding company. Its operations are mostly located in the Northeastern and Mid-Atlantic parts of the U.S. Some of its main competitors are Consolidated Edison Inc. and FirstEnergy Corp. .