New Jersey Resources' Main Unit In Agreement For Rate Hike

New Jersey Resources’ (NYSE:NJR) principal subsidiary, New Jersey Natural Gas (“NJNG”) has reached a basic agreement regarding its rate hike case filed in Nov 2015. This is the first rate hike filing made by New Jersey Natural Gas since 2007.

The administrative law judge has initially accepted the agreement of a rate hike. It is now pending before the commissioners of the New Jersey Board of Public Utilities (BPU) for their final decision.

Revised Rates

The new rates will add $45 million to New Jersey Natural Gas’s annual revenue, effective on or around Oct 1, 2016.

If the proposal is approved by the BPU, a residential customer using 100 therms a month could see an increase of $7.11, or 7.4%, in their monthly bill from $95.44 to $102.55.

The new rate hike was essential seeing that between 2008 and 2015, the company has invested in excess of $806 million in its natural gas transmission and distribution system, including expenditure for customer growth and system improvements.

Benefits of the Rate Hike

The new rate hike will provide the company with necessary funds to continue infrastructure upgrades. These investments are essential for providing safe and reliable services to customers.

The agreement also includes a five-year extension of New Jersey Natural Gas’ Safety and Facilities Enhancement ("SAFE") program. This $157.5 million program seeks to replace the remaining 276 miles of unprotected steel main and associated services in the company’s distribution system.

Zacks Rank & Key Picks

New Jersey Resources currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the utility industry are Clean Energy Fuels Corp. (NASDAQ:CLNE) , Northwest Natural Gas Company (NYSE:NWN) and ONE Gas, Inc. (NYSE:OGS) . Clean Energy Fuels currently sports a Zacks Rank#1 (Strong Buy), while Northwest Natural Gas Company and ONE Gas carries a Zacks Rank #2 (Buy).

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