New Jersey Natural Gas was seeking a 24-percent rate increase.
WALL -- A public utility serving half a million people in the state has agreed to drop its rate hike to 7.4 percent -- down from the 24-percent increase it proposed in November 2015.
New Jersey Natural Gas' original proposed rate hike would have led to a $21.69 increase in an average customer's monthly bill.
Under an agreement reached with the New Jersey Board of Public Utilities' staff and other groups, including AARP New Jersey and the Rate Counsel, an average customer's monthly bill will go up $7.11. The agreement is pending final approval from the BPU.
NJNG serves 512,000 customers in Monmouth and Ocean counties, portions of Burlington, Middlesex, and Morris counties, and one borough in Sussex County. If the agreement is approved, the rate hike will start on or around Oct. 1, the company said in a news release.
"We believe a fair agreement has been reached and look forward to the final resolution of this base rate case," Laurence M. Downes, chairman and CEO of NJNG said in a statement. "We are confident the ultimate outcome will serve the best interests of our customers and company."
The original rate hike was met with much resistance from residents, advocacy groups and local officials alike, especially after NJ Advance Media reported that the CEO's of NJNG's parent company, NJ Resources, had seen their overall compensation skyrocket in recent years.
"What makes the 24-percent increase really outrageous and unacceptable," Belmar Mayor Matt Doherty said at a news conference in April, "is when you juxtapose it to the excessive increases in compensation for the executives at New Jersey Natural Gas. We're talking about Wall Street-type salaries to manage the smallest gas utility in the state of New Jersey."
A spokesman for NJNG, Michael Kinney, said at the time that the rate hike was necessary because the company needed to mend its ailing infrastructure, which was badly damaged by Hurricane Sandy.
Meanwhile, the company was also met with fierce opposition as it tried to move forward with its plan to construct a 28-mile, 30-inch pipeline, the Southern Reliability Link.
The settlement does not include costs related to the SRL, which has not yet started construction. However, NJNG said it could request additional rate treatments for the pipeline in the future. The SRL was approved by the BPU and is currently seeking permits, the company said.
The November 2015 rate request was the first for NJNG since 2007. From 2008 to 2015, NJNG has invested more than $800 million in its natural gas transmission and distribution system.
NJNG will continue to replace its approximately 276 miles of unprotected steel main needed for distribution, the company said.
"Meeting our customers' expectations for safety, reliability and value is the most important thing we do," Downes said. "If approved by the Board of Public Utilities, this rate adjustment will enable us to continue to adequately invest in our system, operate our business and provide our customers with the service they expect and deserve."
Alex Napoliello may be reached at anapoliello@njadvancemedia.com. Follow him on Twitter @alexnapoNJ. Find NJ.com on Facebook.