NJNG Chairman Urges Senate to Help Ease the Burden of Rising Prices

Business Wire, Oct 18, 2005

WASHINGTON -- Laurence M. Downes, chairman and CEO of New Jersey Natural Gas (NJNG), testified today before the Senate on behalf of the American Gas Association (AGA). He urged elected officials, energy utilities and natural gas customers to all play active roles in reducing natural gas prices and assisting those hardest hit by rising energy costs. Downes is chairman of the AGA, a trade organization representing 195 natural gas utilities in the United States.

The hearing, held by the U.S. Senate Committee on Energy and Natural Resources, focused on the outlook for home-heating fuels for the 2005-2006 winter heating season. Customers who heat their homes with natural gas can expect to pay 31 to 62 percent more to this winter, depending on weather and other factors, according to the U.S. Energy Information Administration.

"Low- and fixed-income customers are hit particularly hard by rising home energy costs," Downes stated. "First and foremost, Congress must increase funding for the Low-Income Home Energy Assistance Program to the $5.1 billion level authorized earlier this year. An additional emergency appropriation of $1 billion should also be made," Downes said.

Downes explained that natural gas utilities are doing all they can to ease the price burden on their customers, including purchasing natural gas during summer months, when prices are often lower, and storing it underground for use during winter, offering levelized billing plans and promoting energy efficiency. All of these tools will help this winter, but more must be done.

NJNG has taken steps to minimize the potential price increases customers will face this winter. Before natural gas prices increased due to the demand from summer heat and the impact of hurricanes on supply, NJNG had secured prices for 75 to 80 percent of the supply needed to keep our customers' homes warm during the upcoming winter. Visitors to NJNG's Web site, njliving.com, can find ways to make their homes more energy efficient, including low- and no-cost tips.

A copy of Downes' testimony follows:

Good morning.

I am Larry Downes, and I'm here today in my role as the Chairman of the American Gas Association, which represents 195 utilities across the country that deliver natural gas to more than 55 million customers. I'm also Chairman and CEO of New Jersey Natural Gas, a local natural gas distribution company.

I am here today to share some thoughts with you regarding perhaps the most pressing issue facing our nation today--ensuring reasonably priced natural gas for our customers.

Today, we are witnessing first hand the impact of higher natural gas prices, the vulnerability of our energy security and the need for increased natural gas supply.

The effects of growing demand without adequate supply and other strategies are raising the cost of heating our homes and sending U.S. manufacturing jobs overseas.

The combination of warm weather which increased electricity demand and the catastrophes of Hurricanes Katrina and Rita will lead to unprecedented costs for natural gas this winter.

As the face to the customer, natural gas utilities are doing all they can to ease the price burden on our customers.

I must first point out that natural gas utilities are lifeline service providers.

People depend on us for quality of life.

Our mandate is to serve our customers safely and reliably - whatever it takes.

We have never failed in this regard, and we expect that there will be no supply shortfalls for American households this winter.

However, if it is an unusually cold winter, which is beyond our control, some industrial and commercial customers that have chosen to receive a discount to allow their service to be interrupted may see temporary interruptions.

However, we will do our part to keep all Americans warm this winter, just as we have always done.

To serve our customers, we build a supply portfolio based upon natural gas placed in storage and supply contracts with varying terms and prices.

One important note, natural gas utilities, like our customers, do not benefit from higher natural gas prices.

We make our money on the delivery, not the production, of natural gas, which is regulated by each state we serve.

Our companies are also working to help our customers help themselves.

Customers can avail themselves of levelized billing plans.

They can seek help to weatherize their homes and implement other energy efficiency and conservation measures.

We have increased our efforts to communicate these facts and work with our customers.

The Energy Policy Act of 2005 was a first step in addressing the nation's energy challenges.

Urgent action is needed now to reduce the economic burden of record-high energy costs on consumers.

First and foremost, we must take care of those most at risk this winter.

LIHEAP funding should be increased to the full $5.1 billion appropriated level.

We need an additional emergency appropriation of $1 billion.

That said, in addition to an increased emphasis on efficiency and conservation, natural gas supplies must be increased.