Exhibit 99.2
Investor Fact Sheet NYSE: NJR
| | |
| NJR Contacts: | | |
| Dennis R. Puma, Manager, Treasury Services | | 732-938-1229 |
| William Foley, Treasurer | | 732-938-1224 |
April 2009
SUMMARY OF ACCELERATED INFRASTRUCTURE PROGRAM
Overview
On April 16, 2009, New Jersey Natural Gas (NJNG), principal subsidiary of New Jersey Resources Corporation, received approval from the New Jersey Board of Public Utilities (NJBPU) for its $70.8 million Accelerated Infrastructure Program (AIP). AIP is designed to accelerate previously planned capital expenditure projects, as well as create 75 to 100 jobs to help stimulate the economy and support job growth in the state.
NJNG has identified a total of 14 projects throughout its service area of Monmouth, Morris and Ocean counties. These capital improvement projects include main replacements, system reinforcements and expansions. The design and construction of all projects must commence by December 31, 2010. This is consistent with Governor Jon Corzine’s Economic Stimulus Plan for the state and is expected to enhance the reliability of NJNG’s distribution system.
Capital Investment Costs
Capital investment costs will consist of all prudently incurred capital expenditures associated with the projects, including actual costs of engineering, design and construction, cost of removal (net of salvage) and property acquisition, including actual labor, materials and overheads. A breakdown of the estimated investment costs in each fiscal year is as follows:
| | | |
| Fiscal 2009 | | $6.0 million |
| Fiscal 2010 | | $43.5 million |
| Fiscal 2011 | | $21.3 million |
| Total | | $70.8 million |
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Importantly, recovery of the program costs will be at NJNG’s weighted average cost of capital (WACC) of 7.76 percent. The WACC was approved by the NJBPU in October of 2008 and is as follows:
| | | | | | | | | | | | | | | | | |
| | | Amount $000 | | Ratios | | Cost Rate | | Weighted Cost Rate |
| Long-term Debt | | $ | 411,344 | | | | 41.6 | % | | | 5.44 | % | | | 2.27 | % |
| Short-term Debt | | | 66,000 | | | | 6.7 | % | | | 2.90 | % | | | 0.19 | % |
| Customer Deposits | | | 4,447 | | | | 0.5 | % | | | 4.79 | % | | | 0.02 | % |
| Common Equity | | | 506,332 | | | | 51.2 | % | | | 10.30 | % | | | 5.28 | % |
| | | | | | | | | | | | | | | | | |
| Total | | $ | 988,123 | | | | 100.0 | % | | | | | | | 7.76 | % |
Accounting Treatment and Regulatory Timeline
During AIP construction years, and consistent with Regulatory accounting practices, NJNG is entitled to accrue an Allowance for Funds Used During Construction (AFUDC) on AIP capital expenditures. Therefore, NJNG will accrue the rate impact of financing as AIP expenditures occur, although recovery of investment costs and accrued AFUDC for regulatory purposes will be permitted only after the approved regulatory timeline below.
As indicated, NJNG will recover AIP investment costs and AFUDC outside of traditional base rate recovery methods. The timeline set forth for cost recovery as established by the NJBPU is:
| | | |
| Date | | Action |
| June 2010 | | NJNG files for recovery of AIP project costs incurred through August 31, 2010 |
| October 2010 | | New base rates into effect upon NJBPU approval |
| June 2011 | | NJNG files for recovery of AIP project costs incurred through August 31, 2011 |
| October 2011 | | New base rates into effect upon NJBPU approval |
Rate Impact
The Company estimates that the total rate increase resulting from the AIP will be approximately 1 to 1.25 percent to the bills of an average residential heating customer based on the Company’s current rates and anticipated sales volumes.
For Further Information Contact:
| | | |
| Dennis R. Puma, Manager, Treasury Services | | William Foley, Treasurer |
| 732-938-1229 | | 732-938-1224 |
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