UPDATE 2-Most New Jersey power rates to decline, PSE&G rates flat

* Most residential rates down 3 to 5 percent * Auction secures 8,700 MW of power worth about $7 billion * Commercial and industrial power costs to rise By Scott DiSavino Feb 7 (Reuters) - New Jersey utility regulators on Thursday approved theresults of two electricity auctions that will lower power prices for most of thestate's homes and businesses starting June 1. The state Board of Public Utilities (BPU) said in a release the value of theauctions was about $7 billion for 8,700 megawatts (MW) of power capacity. Customers of Public Service Electric and Gas (PSE&G), the biggest powercompany in the state, however will see steady prices due to large costs relatedto major transmission upgrades in that utility's service area, regulators said. PSE&G is a unit of New Jersey power company Public Service Enterprise GroupInc (PSEG). The BPU said the results of this year's auction continues a four-yearstreak, starting in 2010, of decreasing or stable energy costs for residentialand small business customers. Since 2009, energy costs for residential customers have fallen about 30percent, the BPU said. Electricity traders noted power prices are near decade lows because naturalgas prices were also near decade lows due to record shale production. Gas-firedplants set the price for power in much of the country, including New Jersey. This was the state's 12th auction for Basic Generation Service (BGS), whichsupplies power for those customers who choose not to switch from their regulatedutility to a competitive energy supplier. The four regulated power companies in New Jersey are units of PSEG, PepcoHoldings Corp, FirstEnergy Corp and Consolidated Edison Inc. The BPU said this year's auction was expected to reduce the cost ofelectricity for most residential ratepayers from 3 to 5.5 percent depending ontheir utility. PSE&G rates will remain flat. "New Jersey's competitive auction for electricity has again contributed tofalling electricity costs for most residents and many business customers acrossthe state," Board President Bob Hanna said in a statement. The winning bidders in the auctions included units of BP PLC, ExelonCorp, Macquarie Group Ltd, Morgan Stanley, NextEraEnergy Inc, PSEG, TransCanada Corp, ConocoPhillips,Dominion Resources Inc, DTE Energy Co and PPL Corp. AUCTION PROCESS The Board's approval covers the results of two separate auctions, whichoccurred over three business days. The first auction, which began and ended on Feb. 1, was for large commercialand industrial customers. The second auction, which began on Feb. 4 and ended onFeb. 5, was for fixed price service used primarily by residential and small tomedium sized commercial customers. The energy secured in the fixed-price auction will meet one-third of thestate's residential and small business electric demand for the next three years,starting June 1. The remaining two-thirds of demand for the twelve-month periodwill be met by generation secured in the auctions of 2011 and 2012. The supply acquired for commercial and industrial customers is for one year. About 88 percent of commercial and industrial customers buy power fromcompetitive suppliers and therefore do not rely on the auction. The state said prices from the auction for commercial and industrialcustomers increased in all utility service areas due to higher power capacityprices and increased solar power requirements. The state's four utilities do not earn a profit on the cost of thegeneration secured in the auctions. These costs are passed through directly toratepayers. Monthly Impact of Auction on Average Residential Accounts Utility Usage Current Decrease/ New Bill Percent (kWh) Bill Increase Change Atlantic City 650 $119.99 ($6.42) $113.57 -5.35% JCP&L 650 $97.51 ($2.91) $94.60 -3.00% PSE&G 650 $119.07 $0.06 $119.13 0.05% Rockland 650 $123.22 ($6.74) $116.48 -5.50% - Kilowatt hours (kWh) - Atlantic City Electric is a unit of Pepco - Jersey Central Power & Light (JCP&L) is a unit of FirstEnergy - PSE&G is a unit of PSEG - Rockland Electric is a unit of Con Edison