PARK RIDGE ELECTRIC RATES NOT AFFECTED BY THE NEW JERSEY ELECTRIC AUCTION

You may have heard or read in the news that as a result of the New Jersey Basic Generation Service (BGS) auction that was held earlier this year, there will be a 13% increase in New Jersey’s Electric Rates beginning June 1, 2006.  THESE INCREASES WILL NOT AFFECT PARK RIDGE RESIDENTS AND BUSINESSES.

The BGS auction is held by the New Jersey Board of Public Utilities each year in February as a means to purchase power for the vast majority of the customers that are served by investor owned utilities (e.g. PSE&G and Rockland Electric).  The result of this year’s BGS auction reflected power costs significantly higher than last year.  The higher prices were a result of the increasing costs in the world energy markets, especially in natural gas.

Because the Park Ridge Electric Department is a municipally-owned utility, we are not included in the auction and we procure our own power requirements.  In the fall of 2002 when the power futures markets were at a low point, Park Ridge joined with seven other municipal electric utilities in New Jersey and jointly bid for electric power supply beginning January 1, 2005.  Park Ridge along with the other municipalities awarded a three-year contract to PSE&G for the years 2005 through 2007.  This contract is for a fixed power price over these three years and is unaffected by recent changes in energy prices.  By locking into this long term contract we are able to fund our ongoing capital improvement program and keep rates stabilize.  Our typical residential customer will realize a 35% savings over PSE&G’s rates effective June 1, 2006 (see graph).

We are now in the second year of our three year electric contract, and have already begun the process of again joining with the other New Jersey municipal electric utilities to explore our options to procure power when this contract ends.  Recent forward prices of natural gas have begun to decline and we hope this trend will continue.  With a year and a half remaining on our current contract, we are not in any immediate need to lock in a contract at the historically high prices in the BGS auction.

The above said, we need to understand that we may be coming to the end of the relatively low electric costs we have enjoyed.  Worldwide energy prices remain near all-time highs and future disruptions and price spikes could occur.  We believe our strategy of joining with the other New Jersey municipal utilities in purchasing our power needs is sound; but there is only so much even this can accomplish.  Several years ago we instituted power saving programs in our operation, including operation of our water pumps, where possible, at off hours.  We purchased a hybrid car as our meter reading vehicle and have accomplished other energy saving items also.  While these items are small in the larger energy context, we all should be looking for ways to conserve energy where possible.

The Park Ridge Board of Public Works remains committed to providing reliable power at reasonable costs.

Donald Ruschman, Mayor                                  George J. Mehm Jr., President,

Board of Public Works