Utility Proposes Increase Effective Dec. 1 as a Result of Significantly Higher Natural Gas Costs Throughout Nation
Because of continuing increases in natural gas prices, PPL Gas Utilities will file a request with the Pennsylvania Public Utility Commission to increase the pass-through rate for natural gas purchases effective Dec. 1, 2008.
The proposed increase of $4.0255 per dekatherm would result in a 24.3 percent increase on the total monthly gas bill for an average residential customer.
“We understand that high energy prices place a heavy burden on our customers and on the communities we serve,” said Bob Geneczko, president of PPL Gas Utilities. “Although we try to shield our customers as much as possible from rising costs, we are faced with significant increases in costs to buy natural gas from our suppliers.”
PPL Gas Utilities does not produce its own natural gas and makes no profit from any price increases. Its business is delivering natural gas to its 76,000 customers through the company’s network of pipelines. It purchases gas for customers from a variety of suppliers and passes through the cost of those purchases without markup.
There are two major components of a customer’s gas bill. The largest component is the pass-through charge for the gas itself, which represents about 69 percent of the monthly bill. The second component, PPL Gas Utilities’ charge for delivery, accounts for about 31 percent of the bill.
The PUC reviews and approves gas cost rates for Pennsylvania’s 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.
If the rate request is approved by the PUC, the total monthly bill for a typical residential customer using 7 dekatherms of natural gas will increase from $121.10 to $143.78.
The total bill of typical commercial and industrial customers would increase by 30.2 percent and 32.2 percent respectively.
To help reduce the effects of rising natural gas prices on customers, 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.
“We know any increase has a significant effect on customers, and we have several programs in place to help customers on limited or fixed incomes,” Geneczko said.
Customers who are unable to pay their gas bills during the winter may apply for help from the federal government’s Low Income Home Energy Assistance Program.
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.
In March, PPL Corporation announced an agreement to sell PPL Gas Utilities Corporation and propane subsidiary, Penn Fuel Propane, to UGI Utilities.
UGI Utilities has agreed to acquire these businesses for approximately $268 million in cash plus working capital, pursuant to a stock purchase agreement and following the receipt of necessary regulatory approvals. PPL expects the sale to close before the end of 2008.
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.