South Jersey Energy Company Targets "Aggressive" Marketing at PECO As Gas POR Implemented

South Jersey Energy Company recorded economic earnings of $1.9 million for the first six months of 2011, versus $2.4 million a year ago, parent South Jersey Industries reported yesterday.

Economic earnings exclude certain hedging impacts.

The decline was due to the higher load experienced under South Jersey Energy Company's electric contract with several hundred New Jersey schools in the year-ago quarter versus the current-year quarter.

Executives said that South Jersey Energy Company continues to see growth in its retail electric and gas business in New Jersey, Pennsylvania, and New England.

Furthermore, executives said that the expansion of Purchase of Receivables to PECO's natural gas system starting in January 2012 (see 11/5) will allow more "aggressive" marketing in the territory.

South Jersey Energy Company was serving 7,790 retail gas customers as of June 30, 2011, down from 9,540 a year ago.

Residential retail gas customers were 6,190 as of June 30, 2011, down from 7,983 a year ago. Commercial & Large Volume customers were 1,600 as of June 30, 2011, versus 1,557 a year ago.

Regarding South Jersey Energy Company's retail gas business, SJI said that, "market conditions continue to make it difficult to be competitive in the residential and small commercial markets." SJI continues to focus its retail gas marketing efforts on the pursuit of non-heat-sensitive commercial customers in an effort to mitigate price volatility and weather risk.

Residential retail gas volumes for the quarter were 60,504 dekatherms, versus 73,033 dekatherms a year ago. Commercial & Large Volume throughput for the quarter was 4,310,361 dekatherms, versus 4,301,305 dekatherms a year ago.

South Jersey Energy Company's retail electric revenue, excluding unrealized losses and gains, was $50.5 million for the quarter, versus $42.8 million a year ago. The increase was mainly due to a 25.0% increase in volumes and a 36.1% increase in the average monthly Locational Marginal Price per megawatt-hour for the three months ended June 30, 2011, compared with the same period of 2010.

On a GAAP basis, the income contribution from South Jersey Energy Company for the quarter decreased $6.8 million to $1.8 million due primarily to the change in unrealized gains and losses on forward financial contracts used to mitigate price risk.