UPDATE 2-New Jersey approves $7 bln power auction, rates reduced

* Auction secured about 8,200 MW of power capacity

* Residential rates to decline up to 6.4 percent

(Add details)

By Scott DiSavino

Feb 9 (Reuters) - New Jersey utility regulators on Thursday approved
the results of two electricity auctions which will lower power prices across
nearly all of the state's homes and businesses starting June 1.

In a release, the state Board of Public Utilities (BPU) said the value of
the auctions was about $7 billion for some 8,200 megawatts of power capacity.

Electricity traders noted power prices were down because natural gas prices
were near a 10 year low due to record shale gas production. Gas-fire power
plants set the price for power in New Jersey and much of the country.

This was the state's 11th auction for Basic Generation Service (BGS), which
supplies power for those customers who choose not to switch from their regulated
power company to a competitive energy supplier.

The four investor-owned power companies in New Jersey are units of New
Jersey's Public Service Enterprise Group (PSEG), Washington's Pepco
Holdings, Ohio's FirstEnergy and New York's Consolidated Edison
.

The BPU said this year's auction was expected to reduce the cost of
electricity for residential ratepayers ranging from 6.4 percent to 1.0 percent,
depending on their power company.

"We are pleased that relevant wholesale power market conditions, along with
the competitive auction structure for electricity, has resulted in lower cost of
electricity for most residents and many businesses across the state," Robert
Hanna, President of the BPU, said in a statement.

The winning bidders included units of Citigroup, ConocoPhillips
, Constellation Energy, DTE Energy, Hess Corp,
J.P. Morgan Chase, Macquarie, NextEra Energy, Noble
Group, PSEG, TransCanada and Con Edison.

AUCTION PROCESS

The Board's approval covers the results of two separate auctions, which
occurred over four business days.

The first auction, which began on Feb. 2 and ended on Feb. 3, was for large
commercial and industrial customers. The second auction, which began on Feb. 3
and ended on Feb. 7, was for fixed price service used primarily by residential
and small to medium sized commercial customers.

The energy secured in the fixed price auction will meet one-third of the
state's residential and small business electric demand for the next three energy
years, starting June 1, 2012. The remaining two-thirds of demand for the
twelve-month period will be met by generation secured in the auctions of 2010
and 2011.

The supply acquired for commercial and industrial customers is for one year.

The state's four electric distribution companies do not earn a profit on the
cost of the generation secured in the auctions. These costs are passed through
directly to ratepayers.

Monthly Impact of Auction on Average Residential Accounts

Utility Usage Current Decrease New Percent

KWh Bill Bill Change

Atlantic City 650 $118.00 -$3.35 $114.65 -2.8%

JCP&L 650 $108.45 -$6.96 $101.49 -6.4%

PSE&G 650 $121.40 -$4.41 $116.99 -3.6%

Rockland 650 $124.39 -$1.37 $123.02 -1.1%

- Atlantic City Electric is a unit of Pepco

- JCP&L is a unit of FirstEnergy

- PSE&G is a unit of PSEG

- Rockland Electric is a unit of Con Edison

(Reporting By Scott DiSavino; editing by Jim Marshall)