Press Release

PUC Approves Interim Cost Recovery Increases for Natural Gas Utilities

Published on 1/12/2006

Filed under: Gas

HARRISBURG – The Pennsylvania Public Utility Commission today approved interim gas cost rate (GCR) increases for two natural gas companies because the increases are attributable to the higher wholesale market price of natural gas.

Herman Riemer Gas Co. increased their rates from $5.0569 per MCF to $8.6235 per MCF. The impact to the average residential heating customer using 90 MCFs per year is $320.99 annually. The company serves about 580 customers in Butler County. The new rate is effective Jan. 12, 2006.

Pike County Power & Light Co. increased their rates from $10.3682 per MCF to $12.7407 per MCF.  The impact to the average residential heating customer using 134.4 MCFs per year is $318.86 annually. The company serves about 1,080 customers in Pike County. The new rate is effective Jan. 15, 2006.

The Commission approved the increases by a vote of 4-1. The Commission was concerned that if the companies were not able to pass on actually incurred costs such as the GCR, cash flow problems could ensue, hampering their ability to purchase natural gas and maintain reliable service in the coming months.

Commission Chairman Wendell F. Holland dissented, urging the Commission to defer the collection of the increases until April 1 so consumers were not hit with large increases during the months when natural gas usage is at its highest. (Chairman Holland’s Statement on Herman Riemer and Chairman’s Statement on Pike County )

Natural gas utilities file for an annual increase, which reflects the price paid by the utility for natural gas, reconciled with actual sales and costs from previous gas cost projections. Companies can apply for interim increases to reflect significant changes in the wholesale natural gas market.

By law, the utility cannot make a profit by charging consumers more than what it pays for the natural gas. The approved increases reflect a dollar-for-dollar pass through of the costs paid for natural gas on the wholesale market.

Local gas utilities are required to provide reliable natural gas service at the least possible cost. Every natural gas utility company is audited annually by the PUC to ensure the GCR they are passing on to the consumers reflects the costs they paid and that every effort was made to purchase the gas for the least possible price.

If the utility is found to have acted imprudently, if any costs are deemed not to have been made at least cost, or if the utility has over-collected its costs, the Commission has the ability to make adjustments in the annual GCR proceeding and order refunds to customers.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition.

For more information about the PUC and additional press releases, visit our website at www.puc.state.pa.us.

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Docket Nos.    M-00051914, M-00051890

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