Third Party Energy Supply
The local utility distribution companies (LDC) regulated by the state of NJ provide the Delivery of Natural Gas to all of their customers. The level of service is considered to be retail sales (Distribution) and the Tariff rates governing these services are regulated by the New Jersey Board of Public Utilities. For most customer accounts, Delivery of Natural Gas includes the distribution of natural gas, the operation and maintenance of the physical delivery infrastructure, and the metering of and monthly billing for both usage and peak monthly demand levels (as applicable) at appropriate Tariff rate classifications.
For New Jersey customers who do not choose an independent Third Party Supplier, the LDC will also provide their Natural Gas Supply. The charge for this supply is called Basic Gas Supply Service (BGSS) and is designed to recover the cost of the gas supplies that each LDC purchases for its customers. It is a straight dollar-for-dollar pass-through of those recoverable gas costs (less supplier refunds, credits and other adjustments), and taxes and assessments in connection with the purchase and sale of gas. The LDC earns no profit from this charge.
BGSS rates typically change each October (depending on LDC), however larger commercial and industrial accounts may be served at a rate class with BGSS charges that can change monthly. New Jersey’s four regulated LDC’s are allowed self-adjust the BGSS, by filing the case with the NJBPU to increase, if needed the BGSS charge in February of the next year. However, LDC’s can lower the BGSS charge any time during the year.
When customers get their bills for the BGSS charge, most customers will see a different “Basic Gas” rate on their bills. Since customers are spread out over a number of billing cycles, each cycle’s customers will have their rate pro-rated with the previous month’s rate. (For example, a customer whose meter is read on the 12th day of the month would have 12 days of usage billed at the current month’s rate and 18 days of usage billed at the previous month’s rate.)
The LDC’s regulated by the State of NJ provide Delivery of Natural Gas to all of their customers through their Tariff(s) for Natural Gas Service. For most customer accounts,Delivery of Natural Gas includes the distribution of natural gas, the operation and maintenance of the physical delivery infrastructure, and the metering of and monthly billing for both usage and peak monthly demand levels (as applicable) at appropriate Tariff rate classifications.
For New Jersey customers who choose to switch to an independent Third Party Supplier, their Natural Gas Supply prices can be offered in a variety of forms, such as fixed price full requirements, indexed pricing, month-to-month pricing, blended pricing, prices with caps, collars, floors, etc. The Natural Gas Supply is the unregulated part of the supply chain and is comprised of the charges for natural gas commodity costs, gathering and processing costs, interstate pipeline costs (at tariff rates as regulated by the Federal Energy Regulatory Commission, including compressor losses) to transport the gas from production areas to an LDC interconnection (city gate).