You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
The New Jersey Board of Public Utilities has approved a pilot program for Jersey Central Power and Light Co. that will allow some of the utility's electric customers to choose a private energy supplier and then compare bills with and without retail competition.
JCP&L, an electric utility doing business as GPU Energy, serves more than 11,900 mostly residential customers in Monroe, N.J., the targeted town.
Under the new one-year, energy-only pilot, eligible customers will have the option of choosing to: (1) remain on franchised service; (2) act on an individual basis to select an alternative energy supplier; or (3) join other residents as an aggregated group in the purchase of energy supplies through competitive bidding.
The pilot will test whether ratepayers actually will realize energy savings under competition. To do this, the utility will continue to bill each participant under existing tariff rates, but will issue a credit equal to the greater of the forecast market value or the actual cost of energy consumed. A customer's final bill will reflect the energy charge from his identified alternative energy supplier. If the charge set by the alternative supplier is lower than the market credit calculated by the utility, then the customer could see savings.
The board approved the plan but expressed concern that the pricing mechanism might require a subsidy from nonparticipating ratepayers. It explained that a subsidy would be required when the forecast exceeded the actual value of energy because participants are credited the higher forecast value while the utility only avoids the actual, lower market value for the energy. The board said that it would review the issue of recovery of any such amounts by the utility at its next adjustment clause review proceeding. Re GPU Energy, Docket No. EO96120856, July 7, 1997 (N.J.B.P.U.).
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