Despite actions to soften the effects of rising energy prices on its 77,000 customers, PPL Gas Utilities will file a preliminary request with the Pennsylvania Public Utility Commission to increase the pass-through rate for natural gas purchases starting Dec. 1, 2005.
The proposed increase of $1.98 per dekatherm would result in a 14.6 percent increase on the total monthly gas bill for an average residential customer.
"Proposing an increase this large is something we hate to do. High energy prices place a heavy burden on our customers and on the communities we serve," said Robert M. Geneczko, president of PPL Gas Utilities.
"Our business is delivering gas by pipeline," he added. "State regulations do not allow utilities to make a profit on gas they buy for customers. The gas cost portion of our bill is a pass-through charge."
According to the U.S. Energy Information Administration, the average price gas suppliers charge to gas distributors such as PPL Gas Utilities has gone up by about 27 percent in the last year and has nearly doubled in the last five years.
With the proposed increase in the gas cost portion of customers' bills, residential customers using 8 dekatherms of natural gas would see their total monthly bill go from $107.74 today to $123.51 in December. The effect on individual customers would vary by rate class and gas use.
One year ago, the monthly bill for a residential customer who used 8 dekatherms of natural gas was $100.94.
The PUC reviews and approves gas cost rates for natural gas utilities annually. PPL Gas Utilities' preliminary request is based on current and projected natural gas prices and could change, depending on what happens to natural gas prices before the PUC rules on the request in November.
To help reduce the effects of rising natural gas prices on customers in parts of 34 Pennsylvania counties, PPL monitors prices daily and purchases supplies at the lowest available price. It also purchases gas during warm-weather months, when demand and prices are lower. The gas can then be stored underground for use in the winter.
The company also has a budget billing program that enables customers to spread costs over the entire year and offers special assistance programs to customers with financial hardships.
"These measures help, but are not able to offset entirely what is happening with energy prices in the economy," Geneczko said.
"The rapid rise in energy prices shows the urgent need for a comprehensive national energy policy," he added.
Natural gas is not the only fuel that has seen dramatic price increases. Statistics from the U.S. Department of Energy show that the average price for a gallon of heating oil in Pennsylvania increased by about 25 percent between January 2004 and January 2005, and the average price for a gallon of gasoline is about 20 percent higher than a year ago.
"When consumers compare fuel sources, natural gas remains a good value in a time of high energy prices," Geneczko said. "Gas is efficient and is the cleanest burning fossil fuel. Also, the vast majority of gas used in the United States is produced in this country."