Diversified energy company, Public Service Enterprise Group Inc. PEG has proposed to reduce natural gas bills for residential customers, helping them save around $52 per year. The revised rates are expected to be effective from Oct 1, 2015.
The utility’s typical residential heating customers using 165 therms per month during the winter season, which makes for about 1,010 therms per year, would observe an annual 5.7% reduction in their annual bill to $868. During the winter months, the same customers will see their bills go down by $9 to $138 per month or 5.9%.
In a filing with the New Jersey Board of Public Utilities, Public Service Enterprise stated that this winter it will reduce its basic gas supply rate to 40 cents from 45 cents charged earlier. This is about the lowest rate in the last 15 years. The filing also includes a small reduction in the balancing charge to 9.4 cents from 9.6 cents.
The driving factor behind the rate cut is the decline in natural gas prices what with abundant inventories and booming production. Public Service Enterprise’s decision to purchase gas from the Marcellus Shale region and its well-managed portfolio of gas pipeline and storage agreements are also helping to cut gas costs. This is expected to keep prices low through the year.
Including the latest proposal for the rate cut, Public Service Enterprise has reduced residential gas bills by a striking 47% since 2009 translating to annual savings of $792 for a typical residential gas heating customer. Moreover, Public Service Enterprise’s customers have saved an additional $433 through bill credits since 2012.
Rate cuts on lower commodity prices have become common in the utility space. Two other utility providers – South Jersey Industries, Inc. SJI and UGI Corporation UGI – have also filed for a rate cut last month due to savings from lower natural gas prices.
Zacks Rank
Public Service Enterprise currently has a Zacks Rank #3 (Hold). CMS Energy Corp. CMS is a better-ranked stock in this space carrying a Zacks Rank #2 (Buy).
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