PPL Gas Utilities asked the Pennsylvania Public Utility Commission today to increase the company's natural gas delivery rates by $12.8 million, or about 6 percent. If approved, the increase would be the company's first in more than five years.
"This rate case is about providing safe, reliable service to our customers," said Robert M. Geneczko, president of PPL Gas Utilities. "It's about ensuring that we can continue to make the necessary investments in our gas delivery system."
If the rate increase is approved, the total monthly bill for an average residential customer would increase about $10.60.
"PPL Gas Utilities operates about 3,500 miles of pipeline across 34 Pennsylvania counties," said Geneczko. "The costs of maintaining and improving such an expansive delivery system continue to rise. Increasing rates is not something we take lightly, but we must be financially able to maintain and improve the system."
Since the last rate increase, Geneczko said, PPL Gas Utilities has invested more than $50 million in safety and reliability. At the same time, the price of pipe used for service lines to homes is up more than 30 percent. The price of plastic pipe used for main lines has increased nearly 65 percent, while the cost of steel pipe used for main lines is up 50 percent. Other costs, such as health care, have also increased significantly.
The company has absorbed these costs while continuing to maintain a high level of service. This level of service is recognized in the PUC's quarterly "Quality of Service" surveys. For the past nine quarters, PPL Gas Utilities has achieved the best overall survey scores for customer satisfaction among gas utilities regulated by the PUC. The company has also improved its response to gas-odor calls every year since the last rate increase.
Request affects delivery rates, not gas supply charge
The request filed with the PUC applies to delivery rates and not to the cost of the natural gas itself. Delivery charges and gas-supply charges are the two main components of customer bills. Delivery charges currently make up about 28 percent of the average residential bill, while gas costs, or gas-supply charges, make up about 72 percent.
PPL Gas Utilities does not — and cannot by law — profit from the cost of the natural gas itself. On behalf of its customers, the company negotiates with wholesale natural gas suppliers for a reliable and cost-effective supply of gas. Customers pay the cost to procure that gas and transport it in interstate pipelines to PPL Gas Utilities' system.
"This winter's increase in the cost of natural gas made the decision to request an increase in delivery rates more difficult, but we believe an increase is necessary if we are to continue to invest in safety and reliability," said Geneczko. "The rate case process takes time, and this filing will not have an immediate effect on the company's delivery rates for natural gas."
While Geneczko said the company is requesting that the new rates become effective July 1, 2006, he said that the rate case process could take as long as nine months, delaying the effective date of the rate increase until Feb. 1, 2007.
Help for customers coping with higher energy costs
PPL Gas Utilities' request to increase delivery rates includes funding for its Customer Assistance Program, which offers help to customers who are having trouble paying their bills because of financial hardships. The company expanded enrollment in the program from 2,200 to 2,470 customers this year, and will continue to offer the program in the future.
The company will also continue to make a corporate contribution to Operation Share, its heating-assistance fund. Last year, the company tripled its contribution to $150,000. Revenue from rates does not support Operation Share. The program is supported solely through voluntary contributions from the company, customers and employees.
The company's budget billing program also will continue to offer customers the opportunity to ease the pressure of higher bills during the winter season by spreading costs equally over a 12-month period.
Impact on customer bills
If the company's entire request is approved, the total bill for a typical residential customer with an average monthly use of 8 dekatherms would increase from $149.65 to $160.25 per month, or by 7.1 percent. A dekatherm is a measure of the heat energy in the gas consumed.
The total bill for a commercial customer with an average monthly use of 32 dekatherms would increase from $534.09 to $558.99 per month, or by 4.7 percent, and the total bill for an industrial customer with an average monthly use of 173 dekatherms would increase from $2,757.41 to $2,853.74, or by 3.5 percent.
For more information on PPL Gas Utilities' filing, customers can call the company at 1-800-652-0550.
PPL Gas Utilities, a subsidiary of PPL Corporation (NYSE:PPL) provides natural gas delivery service to 76,000 homes and businesses in 34 Pennsylvania counties and a small portion of Maryland.