While permitting New Jersey Natural Gas Co., a natural gas local distribution company (LDC), to continue adjustment-clause recovery of its pipeline transition costs, the New Jersey Board of Public Utilities (BPU) has approved a "financial risk-management pilot program" designed to protect the LDC from extreme supply price volatility. According to the BPU, the program will reduce supply costs by "locking in" alternative gas-supply prices using natural gas options traded on the New York Mercantile Exchange. Ratepayer safeguards include a supply cost benchmark to measure program performance, spending caps, and scheduled reviews. The LDC will be permitted to recover program costs through its levelized gas-adjustment clause. Re New Jersey Natural Gas Co., BPU Docket No. GR94070333, OAL Docket No. PUC 07974, Dec. 21, 1994 (N.J.B.P.U.).
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