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UGI Gas Files at Pennsylvania PUC for 17.5% Higher Service Delivery Rate

February 2, 2016 By Cheryl Kaften

UGI Utilities – Gas Division filed a request (Docket No. 2015-2518438) with the Pennsylvania Public Utility Commission (PUC) on January 19 to increase its base rates for service delivery to residential, commercial, and industrial customers by $58.6 million annually – or 17.5 percent.

UGI currently serves 570,000 natural gas customers in eastern and central Pennsylvania, including customers of UGI Penn Natural Gas and UGI Central Penn Gas.

The base rate increase – which UGI described as its first request in 21 years — would fund ongoing system improvements. UGI downplayed the effect of the change, noting, “Even if the proposed increase is granted by the commission, the average monthly residential heating customer bill will be 3.2 percent lower than the average bill following UGI Gas’s last rate case in 1995.

The delivery charge, which this proposal would increase, provides a utility with the funds needed to own, operate, and maintain the gas distribution system and provide customer service and emergency response services.

If UGI’s rate request is approved by the PUC, the bill for a typical residential heating customer who uses 57.3 hundred cubic feet of gas (ccf) per month will increase $10.20 – or by 19.7 percent – from $51.77 to $61.97 per month.

The bill for commercial customer who uses 32.3 thousand cubic feet (Mcf) per month will increase $20 –or by 7.4 percent – from $270.71 to $290.71 per month.

The bill for a typical industrial customer who uses 132.7 thousand cubic feet (Mcf) per month will increase $33.53 – or by 3.2 percent – from $1,062.77 to $1,096.30 per month.

The other component of customers’ bills, which will not be affected by the current base rate filing, is the purchased gas commodity charge. In fact, in December 2015, UGI reduced its gas commodity charge, which was the third purchased gas cost decrease enjoyed by UGI Gas Division customers last year, the company noted, commenting, “The December 2015 purchased gas cost decrease is a continuation of a seven-year trend of moderating natural gas prices.”

“UGI is working hard to manage costs and improve system performance while continuing our commitment to safely and reliably deliver natural gas to our customers and the many communities we serve,” commented Vice President of Rates and Government Relations Paul Szykman. “Currently, [our] Gas Division has the lowest natural gas residential distribution rates in … Pennsylvania among major gas utilities.”

In its filing, UGI claimed that, since its last rate case in 1995, the company has made over $1 billion in system investments, increasing its rate base by over 120 percent.

UGI also is updating its estimated average monthly customer usage of natural gas, which is used in establishing new rates, the company announced.

“UGI is making this change in recognition of changes in the natural gas market over the past two decades which include: expanded use of high-efficiency appliances; more energy-efficient housing; and greater consumer awareness of energy conservation,” the company explained, adding, “The result of these changes is the average customer uses significantly less natural gas today than at the time of UGI’s last rate case in 1995.”09

UGI is requesting that the new gas rates take effect March 19. However, the PUC typically suspends the effective date for general base rate proceedings to allow for investigation and public hearings. The PUC proceeding is expected to last approximately nine months, which would delay implementation of the new rates until late October.

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