The UGI Utilities Gas Division Tuesday filed a request with the Public Utility Commission to increase its base rates for residential, commercial and industrial customers by $58.6 million annually.
The base rate increase – UGI’s first request in 21 years -- would fund ongoing system improvements and operations necessary to maintain safe and reliable natural gas service.
As part of its filing, UGI is also proposing the implementation of an energy efficiency and conservation program that would promote and reward customers’ efforts aimed at increasing their efficient use of natural gas.
“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,” Paul Szykman, UGI Vice President of Rates and Government Relations, said. “Currently, UGI Gas Division has the lowest natural gas residential distribution rates in the Commonwealth of Pennsylvania among major gas utilities.”
In its filing, UGI noted that since its last rate case in 1995, UGI has made over $1.0 billion in system investments, increasing the Company’s rate base by over 120 percent.
“We are currently investing approximately $150 million annually in capital projects to upgrade our system,” Szykman said. “UGI is well underway on an aggressive infrastructure betterment initiative that is replacing all non-contemporary pipelines with those made of contemporary materials.”
UGI’s base rate increase request will impact one of the two major cost components that appear on customers’ natural gas bills. 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.
The other component of customers’ bills, which will not be affected by today’s base rate filing, is the purchased gas commodity charge and reflects the actual cost the Company pays to purchase gas on the wholesale market, with no profit markup.
In fact, in December 2015, UGI lowered its gas commodity charge, which was the third purchased gas cost decrease enjoyed by UGI Gas Division customers in the past year. The December 2015 purchased gas cost decrease is a continuation of a seven-year trend of moderating natural gas prices.
UGI is also updating its estimated average monthly customer usage of natural gas, which is utilized in establishing new rates. 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 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.
If UGI’s base rate case is approved, the bill for a typical UGI Gas Division 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 a typical UGI Gas Division commercial customer who uses 32.3 thousand cubic feet (Mcf) per month will increase $20.00 or by 7.4 percent from $270.71 to $290.71 per month.
The bill for a typical UGI Gas Division 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.
UGI is requesting that the new gas rates take effect March 19, 2016. 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 2016.
Customers and interested parties may view UGI’s base rate filing materials on the UGI website and clicking on the “rate filing” tab on the home page. Customers with questions may also call UGI toll-free at 1-800-276-2722 to receive further information on the proposed rate increase or to find out what actions they make take.
NewsClip:UGI Plans First Base Rate Hike In Years