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New Jersey Resources stresses reliance on customer growth in 2017, beyond

New Jersey Resources Corp. continues to bank on customer growth and higher base rates for earnings growth in 2017 and beyond, in line with previous expectations and already supported by financial results in the nine months of the fiscal year.

For the fiscal third quarter of 2017, New Jersey Resources touted new higher base rates and utility gross margin from new customers at New Jersey Natural Gas Co. as the company's principal earnings drivers. For 2017, New Jersey Resources expects a customer growth rate of 1.7%, driven by a combination of new construction and conversions to natural gas from other fuel sources, executives said during an Aug. 2 earnings call.

"We expect strong and balanced customer growth at New Jersey Natural Gas and that growth should add more than $5 million in utility gross margin each year," said Laurence Downes, chairman, CEO and president of New Jersey Resources. "And we also project rate base growth of about 6% annually."

New Jersey Resources anticipates that its regulated businesses, New Jersey Natural Gas and NJR Midstream, would contribute 60% to 75% of net financial earnings in 2017.

The company has already signed on 6,231 new customers through the nine months ended June 30, which represents an almost 18% increase year over year. "We believe we will add about 9,000 new and converting customers in fiscal 2017, with an anticipated utility gross margin contribution of $5.2 million annually," said Patrick Migliaccio, senior vice president and CFO of New Jersey Resources.

Between fiscal 2017 and fiscal 2019, New Jersey Resources plans to allot $107 million in capital to add 26,000 to 28,000 new customers to hit the 1.7% target growth rate, Migliaccio said.

New Jersey Resources posted net financial earnings of $17.4 million, or 20 cents per share, for the fiscal third quarter, up from $11.0 million, or 13 cents per share, in the prior-year period.