Citing concerns about gas price volatility, the New Jersey Board of Public Utilities has ruled that Public Service Electric and Gas Co. should maintain its existing annual fuel cost adjustment mechanism rather than shift to a monthly charge as originally proposed for its local gas distribution customers.
Under a settlement approved by the board, the LDC will have the option to impose the monthly charge on its general-service and large-volume customers. The current annual charge is levied on its residential, cogeneration firm service, street lighting and natural gas vehicle customers.
Since the new mechanism would have produced monthly changes in all customers' fuel rates, the utility had proposed safeguards such as "price caps" and "ceilings" to prevent extreme price fluctuations. Nevertheless, the parties to the case agreed to withdraw the proposal after board expressed concern about the potential for price volatility in the natural gas market. The board said such fluctuations might have a severe impact on consumers if fuel charges were adjusted monthly rather than annually. Re Pub. Service Elec. & Gas Co., Docket No. GR96070554, April 2, 1997 (N.J.B.P.U.).