WALL, N.J. – The New Jersey Board of Public Utilities (BPU) today approved New Jersey Natural Gas’ (NJNG) request to provide natural gas service to the Red Oak power plant, an 830-megawatt combined cycle power plant located in Sayreville, New Jersey, under a contract executed between NJNG and TAQA GEN-X, LLC (TAQA-Red Oak).
The agreement calls for NJNG to provide natural gas delivery service to TAQA-Red Oak, which may be interrupted by NJNG when cold weather or other conditions occur. At its option, NJNG will supply natural gas to TAQA-Red Oak under its gas supply incentive program with margins to be shared with customers. TAQA-Red Oak will be responsible for the cost of connecting to NJNG’s distribution main, which currently runs within 600 feet of the facility. NJNG’s existing customers will not pay for any of the costs of connecting or providing natural gas service to TAQA-Red Oak. The agreement will be effective through September 30, 2022.
NJNG expects to begin serving and supplying natural gas to Red Oak in the fall of 2014, once the connection to its main is completed. At that time, the Red Oak facility will be NJNG’s largest customer.
On August 21, 2013, the BPU granted NJNG a limited municipal franchise in Sayreville, specifically for the purpose of providing natural gas distribution service to TAQA-Red Oak. NJNG already serves another generating station in Sayreville.
“We are pleased to welcome Red Oak as our newest and largest customer,” said Laurence M. Downes, president and CEO of New Jersey Natural Gas. “Supplying safe, reliable natural gas service to TAQA-Red Oak is truly a win-win proposition not just for New Jersey Natural Gas and its shareowners, but for our customers and the state as well.”
The agreement is expected to bolster New Jersey’s energy master plan, since NJNG’s natural gas supply options should allow TAQA-Red Oak to reduce its generating costs, which should reduce the cost of the electricity it produces. In turn, this price deferential could potentially lead to more power being generated and sold by TAQA-Red Oak on the regional power grid. The BPU, in a related recent order, said this price differential and increased generation would lead to lower electricity costs for New Jersey consumers, as well as reduced air pollution, since the state will be less reliant on electricity from environmentally dirtier and less efficient coal-fired power plants.
By providing TAQA-Red Oak with natural gas service via NJNG’s distribution main, the agreement also avoids connecting the plant directly to the interstate pipeline system, an option that would have deprived the state and its customers of revenues from this facility.