UPDATE 2-Most New Jersey power rates to decline, PSE&G rates flat

Thu Feb 7, 2013 3:24pm EST

* Most residential rates down 3 to 5 percent
    * Auction secures 8,700 MW of power worth about $7 billion
    * Commercial and industrial power costs to rise


    By Scott DiSavino
    Feb 7 (Reuters) - New Jersey utility regulators on Thursday approved the
results of two electricity auctions that will lower power prices for most of the
state's homes and businesses starting June 1.
    The state Board of Public Utilities (BPU) said in a release the value of the
auctions was about $7 billion for 8,700 megawatts (MW) of power capacity.    
    Customers of Public Service Electric and Gas (PSE&G), the biggest power
company in the state, however will see steady prices due to large costs related
to major transmission upgrades in that utility's service area, regulators said.
    PSE&G is a unit of New Jersey power company Public Service Enterprise Group
Inc (PSEG).
    The BPU said the results of this year's auction continues a four-year
streak, starting in 2010, of decreasing or stable energy costs for residential
and small business customers.
    Since 2009, energy costs for residential customers have fallen about 30
percent, the BPU said.
    Electricity traders noted power prices are near decade lows because natural
gas prices were also near decade lows due to record shale production. Gas-fired
plants set the price for power in much of the country, including New Jersey.
    This was the state's 12th auction for Basic Generation Service (BGS), which
supplies power for those customers who choose not to switch from their regulated
utility to a competitive energy supplier.    
    The four regulated power companies in New Jersey are units of PSEG, Pepco
Holdings Corp, FirstEnergy Corp and Consolidated Edison Inc
.
    The BPU said this year's auction was expected to reduce the cost of
electricity for most residential ratepayers from 3 to 5.5 percent depending on
their utility. PSE&G rates will remain flat.
    "New Jersey's competitive auction for electricity has again contributed to
falling electricity costs for most residents and many business customers across
the state," Board President Bob Hanna said in a statement.
    The winning bidders in the auctions included units of BP PLC, Exelon
Corp, Macquarie Group Ltd, Morgan Stanley, NextEra
Energy Inc, PSEG, TransCanada Corp, ConocoPhillips,
Dominion Resources Inc, DTE Energy Co and PPL Corp.
        
    AUCTION PROCESS    
    The Board's approval covers the results of two separate auctions, which
occurred over three business days.    
    The first auction, which began and ended on Feb. 1, was for large commercial
and industrial customers. The second auction, which began on Feb. 4 and ended on
Feb. 5, was for fixed price service used primarily by residential and small to
medium sized commercial customers.    
    The energy secured in the fixed-price auction will meet one-third of the
state's residential and small business electric demand for the next three years,
starting June 1. The remaining two-thirds of demand for the twelve-month period
will be met by generation secured in the auctions of 2011 and 2012.
    The supply acquired for commercial and industrial customers is for one year.
    About 88 percent of commercial and industrial customers buy power from
competitive suppliers and therefore do not rely on the auction.
    The state said prices from the auction for commercial and industrial
customers increased in all utility service areas due to higher power capacity
prices and increased solar power requirements.
    The state's four utilities do not earn a profit on the cost of the
generation secured in the auctions. These costs are passed through directly to
ratepayers.    
    
  Monthly Impact of Auction on Average Residential Accounts    
        
 Utility         Usage  Current   Decrease/  New Bill  Percent
                 (kWh)  Bill      Increase             Change
                                                              
 Atlantic City     650  $119.99     ($6.42)  $113.57    -5.35%
                                                              
 JCP&L             650   $97.51     ($2.91)   $94.60    -3.00%
                                                              
 PSE&G             650  $119.07      $0.06   $119.13     0.05%
                                                              
 Rockland          650  $123.22     ($6.74)  $116.48    -5.50%
        
    - Kilowatt hours (kWh)
    - Atlantic City Electric is a unit of Pepco    
    - Jersey Central Power & Light (JCP&L) is a unit of FirstEnergy    
    - PSE&G is a unit of PSEG    
    - Rockland Electric is a unit of Con Edison
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