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Audit Report Of Utility, Affiliates Recommends "Prominent" Placement Of Retail Choice On Utility Website, Better Price To Compare Info, Calculator To Evaluate Offer Competitiveness
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A report by an auditor retained by the New Jersey BPU examining New Jersey Natural Gas Company (NJNG), and its affiliates, has again recommended more prominent placement of retail choice information on NJNG's website, along with better price to compare information, and a calculator for supply costs
The audit finds that no circumstances unique to NJNG appear to constrain third party supplier (TPS, or retail supplier) participation in NJNG's service
area, and that low choice participation reflects statewide issues
"We found no barriers uniquely imposed by NJNG, whose price to
compare is simply much lower than what TPS participants can regularly or broadly offer," the audit states
The audit does observe that, "Structural reasons
(e.g., ownership and control of capacity resources) may or may not contribute to these conditions,
but, given the commonality of the issue across the state, it would take a statewide review to identify
and address them."
While the audit does make several recommendations concerning the retail energy market at NJNG, the audit expects that such improvements would be "marginal" given the statewide issues
The audit said that NJNG's supplier-choice page, "continues to lack the prominent location recommended by the
previous audit of this type"
Further, the audit said that the relevant Price to Compare information on NJNG's website, "was not suitably prominent,
consolidated or clear, involving information presented across various pages and links."
Additionally, the audit states that NJNG's website, "still does not include a calculator
that customers can use to evaluate offer competitiveness."
"Information about supplier choice should begin with prominent placement on the NJNG home
page. It should be accompanied by graphics that direct attention to the securing of information
about customer choice and how to analyze and make decisions about suppliers. All links should
function. There should be at least quarterly updates of TPS alternatives available.
Price to compare information should be highlighted, reachable with a minimum of required
'clicks,' and avoid the need for moving back and forth between links. All the website intends to
offer about price to compare should be available in one location," the audit states
"Inclusion of comparable offers and on-line bill calculators on the website would increase visibility
and understanding of options, including pricing," the audit states, though the audit notes that this may be more of a state-level function
"[W]here they exist [TPS offer lists and bill calculators], they are more
typically the subject of common use by all of a jurisdiction’s utility service providers. NJNG
should make known to the BPU its views on the advantages and disadvantages of such an addition
and propose what it views as an acceptable model should the BPU consider adoption of statewide
inclusion of such an option," the audit states
The audit faults NJNG for not providing a gas operating manual or supplier operating manual for TPSs, as other LDCs in New Jersey do
While some of the information included in such other LDCs' manuals is included on NJNG's website through various different links, the auditor said that the manuals also incorporate guidance and clear instructions to TPSs that go beyond the provision of
sign-up forms, agreements, and terms-and-conditions documentation that NJNG provides online
The audit notes that NJNG formerly offered such a manual to retail suppliers but NJNG stopped publishing it several years ago
"We recommend consolidation of the various
sources of information, summation of the roles and responsibilities of each party (customer, TPS,
NJNG), identification, guidance, and instructions on the key electronic interfaces that support
those activities in one document that NJNG makes available to TPSs and for use by its own
employees," the audit said
Concerning affiliate issues, the audit raised several concerns regarding New Jersey Home Services Company (NJRHS)
The audit said that, "Management has continued to make extended payment options available to joint NJNG-NJRHS customers for both service contract charges from NJRHS and equipment
installed by NJRHS without announcing their availability to non-affiliated entities."
The audit states, "Management should cease its offering of extended payment options to joint NJNG/NJRHS
customers for both service contract charges from NJRHS and equipment installed by NJRHS. Each
of the previous two audits of this type recommended similarly. Compliance with Section 14:4-
3.3(c) of the Standards do not permit offering such to an RCBS [related competitive business segment] but not to other, non-affiliated
entities. Extending the option to others who have relationships with NJNG customers may
theoretically solve the non-compliance issue, but there appears no practicable way to do so."
The auditor said that NJNG should add a clear and specific statement that services will be provided to others on the same terms and
conditions as apply to services offered to affiliated RCBSs [related competitive business segment].
In publicizing the availability of such services from NJNG, the auditor said that NJNG should remove statements of conditions that may be required, saving
negotiation of them until after expressions of interest. Further, the auditor said that NJNG should limit such conditions proposed to those
applicable to RCBSs receiving the services required.
The auditor reported that the use of
a common customer inquiry center for NJNG and NJRHS has included employee
incentives for securing new or expanded NJHRS contracts and extended payment plans not
applicable to NJHRS competitors, both of which the last two audits of this type found out
of compliance with the relevant affiliate standards
The auditor alleged that the joint call center use by NJNG and NJRHS and the offering of incentives to employees
who enroll customers in new or expanded services violates Section 14:4-3.3(o) of the companies' affiliate standards
The auditor said that NJNG should limit employee participation in incentives associated with NJRHS customer enrollment
to individuals who do not and cannot handle NJNG customer inquiries.
Concerning NJNG supply and capacity, the audit found that NJNG’s management of its gas-supply assets has generally complied with regulatory
requirements, but said that, "management of its relationship with NJRES [NJR Energy
Services] has been disappointing."
Among other findings, the audit said that NJRES, "has a favored position for shorter-term capacity releases".
The audit said, "As NJRES traders are quite familiar with NJNG’s pipeline-capacity assets, have access to the same
pipeline EBBs, etc., and are sitting in the same room with NJNG’s traders, they are well aware of
any possible releases. NJNG sometimes agrees with NJRES in advance, and posts releases as
'prearranged, biddable' at an agreed rate.159 In that event, third parties are made aware of NJRES’s
interest, but NJRES can match any higher offer. Other times NJNG and NJRES agree that a release
will be posted as 'non-prearranged, biddable', so third parties are not necessarily made aware of
NJRES’s interest. In those cases, NJRES will submit an agreed initial bid when the bid period
opens."
The audit said, "These shorter-term releases are always made 'recallable'. By posting its capacity for release on a
'recallable' basis NJNG diminishes its value. A market participant interested in the capacity
understanding that NJNG can take it back, likely at times of high market value, will certainly be
discouraged from offering prices that reflect the added value it would gain at those premium times.
However, NJNG and NJRES market-facing personnel work from the same room and their staffs
include many who have switched employment between the two. They possess knowledge about
NJNG’s system demands, needs, and resource interactions involved in meeting them. They have,
relative to their competitors who may want access to the same NJNG capacity, superior knowledge
about the circumstances that may generate an NJNG recall, and, more importantly, the chances
that recall will happen. Moreover, given that a subject-to-recall release diminishes value, it is
critical that controls exist to ensure that NJNG does not overuse it; i.e., fail to make offers not
subject to recall in a way that can further advantage NJRES. We also addressed earlier in this
chapter another advantage that an NJNG affiliate gains through its ability to match third-party
offers for proposed releases posted under FERC rules."
The audit said that, "The simplest solution to the problem of favoritism toward NJRES in capacity
releases is not to allow it to bid. We suspect that any third party who might bid on released capacity
is well aware of the relationship between NJNG and NJRES. The only way to change that
perception is to inform market participants that NJRES is not allowed to bid on capacity releases."
The audit alternatively said that, if NJRES continues to be allowed to bid, it should be required to pay at least what each asset costs
NJNG.
The audit said, "Cost recovery in secondary markets suggests a value of NJNG’s gas-supply assets well in excess
of their costs. This positive difference makes effective NJNG use of markets an important source
of offsetting costs recovered from customers. Affiliate NJRES has remained a prime beneficiary
of these assets. NJNG needs to address the ways in which it favors its affiliate in conducting its
gas-supply operations, and make appropriate adjustments. The Company’s Affiliate Standards
Compliance Plans have addressed NJNG’s relationships only with its retail affiliates, but NJRES
operates at wholesale. Development of an Affiliate Standards Compliance Plan that addresses the
relationship between NJNG and NJRES is in order."
The audit said, "We found NJNG’s mix of commodity suppliers increasingly concentrated on one supplier. Patterns
in purchases from that supplier raise questions regarding its relationship with affiliate NJRES.
NJNG should demonstrate that the terms of supply from that supplier are fully competitive."
The BPU is accepting comments on the audit
Docket No. GA22020074
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June 11, 2026
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Reporting by Paul Ring • ring@energychoicematters.com
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