PSE&G Reaches Settlement To Raise Gas, Electric Rates In NJ

Public Service Electric and Gas Co. has reached a settlement over plans to raise power and natural gas rates in New Jersey, agreeing to half the amount of new revenue and a smaller return on equity than requested, according to a copy of the agreement filed with the state.

In the settlement, New Jersey's largest utility, which is owned by Public Service Enterprise Group Inc. (PEG), agreed to a combined increase in revenue of $100 million and a return on equity of 10.3%. The utility's request as of March had been for a $204 million combined increase in electric and gas revenues and a return on equity of 11.25%, according to a company investor presentation from last month.

A spokeswoman for PSE&G declined to comment on the settlement. The agreement, which was signed by the state public advocate and New Jersey Large Energy Users Coalition, still requires approval from the New Jersey Board of Public Utilities. The board could decide on the settlement as early as Monday.

The settlement would increase the electric bill of a typical residential customer by 0.9%, or $12.40, a year. A typical residential gas customer would see an increase of 1%, or $14.32, a year, according to the settlement.

PSE&G filed for the increase a year ago, saying at the time that the additional revenue from electricity and gas delivery rates was needed to maintain and upgrade the distribution systems.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com

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