TRENTON -- The costs associated with the PennEast pipeline and two other projects that will serve New Jersey Natural Gas customers will dwarf any savings ratepayers may have been hoping to save on their utility bills, according to an expert's analysis.
Customers could save up to $62.75 per year on their heating and electric bills due to savings from the PennEast pipeline, once completed, according to Greg Lander, president of Skipping Stone, an energy market services firm.
But, after factoring in construction fees for PennEast and two other projects -- the Southern Reliability Link and Garden State Expansion -- the combined price tag could end up costing customers $96 to $161 more per year, Lander said.
"If you compare the supposed $32.63 million of annual savings to the $80 million of known costs for 20 years, you see that New Jersey Natural Gas ratepayers could be underwater $48 million per year," Lander said.
The construction costs for the projects are paid for by customers in the form of pipeline transportation fees on customers' monthly bills.
Michael Kinney, a spokesman for New Jersey Natural Gas, criticized the analysis as "misleading and without merit" because the intention of the PennEast projects is not the same as the other projects.
Kinney said that while PennEast is a money-saver for ratepayers, the Garden State Expansion and Southern Reliability Link are meant to improve the system's reliability.
"These investments, which are recovered through rates, strengthen the integrity of our delivery system and the service we provide," Kinney said. "The cost of investing in infrastructure is about ensuring the safe, reliable, resilient delivery of natural gas to our customers."
Pipeline infrastructure is inherently controversial due to the publicized risks of environmental degradation due to methane leaks, safety risks due to possible pipeline explosions and the use of eminent domain to procure land, officials say.
The PennEast pipeline, Southern Reliability Link and Garden State Expansion have been no different.
What makes this critique unique is that Skipping Stone is an outside firm warning a non-competing company's customers that their rates could increase -- and both companies work with or within the natural gas industry.
According to PennEast, a Drexel University and Econsult Solutions study estimates the pipeline's total construction cost will be $1.62 billion.
New Jersey Resources -- the parent company of NJNG -- is a 20-percent owner of the PennEast project. NJNG has signed up to buy 18 percent of the space through which the gas coming off the line will move, says Lander.
If the New Jersey Board of Public Utilities permits NJNG to pass its portion of PennEast's annual costs for construction onto their customers, ratepayers would be responsible for roughly $27.9 million per year in transportation fees, says Lander.
Adding an estimated $52.6 million per year for the Garden State Expansion and Southern Reliability Link projects brings the potential total construction costs passed onto customers to $80.6 million, Lander says.
Lander says that his math shows that, regardless of intent, NJNG's customers could each be on the hook for $1,922 annually in pipeline transportation fees over the next 20 years -- and that's if the $1,306 in savings they have been promised with the building of PennEast materializes.
The 20-year cost-per-customer if those savings are not realized totals $3,228, he says.
PennEast-supplied gas is meant to save customers money on gas usage, Kinney said.
Projects like the Garden State Expansion and Southern Reliability Link are meant to bolster NJNG's resiliency and continued energy delivery during emergencies or extreme weather events, he says.
"The need for this important project has always been about providing greater resiliency and the avoidance of a major system failure," Kinney said when speaking about the Southern Reliability Link.
"It is not about gas cost savings," he said.
EDITOR'S NOTE: This story has been updated to clarify the ownership of the Garden State Expansion project. The project is being built by the Williams company and will serve gas to NJNG customers. Attribution has also been added for clarity to two paragraphs that reference the analysis by Lander.
Greg Wright may be reached at gwright@njadvancemedia.com. Follow him on Twitter @GregTheWright. Find NJ.com on Facebook.