Natural Gas Price Breaks for Distributed Generation – New Jersey

New Jersey Natural Gas Company (NJNG) received approval in January 2003 from the New Jersey Board of Public Utilities (BPU) to offer a special pricing plan to residential and commercial customers who use natural gas to fuel distributed generation (DG) technologies like fuel cells or microturbines. NJNG was required to develop of DG tariff as part of a stipulation in a 2001 proceeding that allowed NJNG to unbundle its rates.

NJNG’s DG plan proposes different prices for residential and commercial customers, and the potential savings vary depending on volume and season of consumption. Under the new pricing plan, an average commercial customer could save up to 50 percent and a residential customer could save up to a 40 percent on delivery charges for natural gas used to power DG technologies.

Benefitsare also anticipated for NJNG and its customers from the DG tariff. Since Distributed Generation Service usage typically peaks in the summer period while NJNG’s traditional gas service peaks in the winter periods, new DG load is expected to enable NJNG to improve its system load factor and better utilize existing assets to service summer DG peaking requirements, thereby offsetting potential price increases to existing customers. The availability of the DG tariff is also expected to enable NJNG to increase its gas distribution load and prospective sales revenues.