Press Release

PUC Approves Settlement Resolving UGI Companies’ DSIC-Recovery Mechanisms

Published on 7/8/2015

Filed under: Gas

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today approved settlements related to the distribution system improvement charges (DSICs) of UGI Penn Natural Gas Inc. (UGI-PNG) and UGI Central Penn Gas Inc. (UGI-CPG), addressing the companies’ DSIC-recovery mechanisms.

The Commission voted 5-0 to approve the Joint Petition for Settlement which resolves matters related to the Sept. 11, 2014, Final Order approving UGI-PNG’s Long-term Infrastructure Improvement Plan (LTIIP), as well as its DSIC, subject to refund. The settlement agreement was reached between UGI-PNG and the Office of Consumer Advocate (OCA).

The Commission also voted 5-0 to approve the Joint Petition for Settlement which resolves matters related to the Sept. 11, 2014, Final Order approving UGI-CPG’s LTIIP, as well as its DSIC, subject to refund. The settlement agreement was reached between UGI-CPG and OCA.

The companies’ DSICs were filed in compliance with Act 11 of 2012 and were effective April 1, 2015.

In the Sept. 11 Orders, the Commission assigned several issues to the Office of Administrative Law Judge for hearing and recommendation. The issues under consideration included the companies’ DSIC recovery of expenditures related to equipment, electronic systems and software, vehicles and tools; the inclusion of gathering lines and storage lines as DSIC-eligible property; and the companies’ proposals to include in their DSIC rates plant investment placed into service between Dec. 1, 2013, and Nov. 30, 2014.

UGI-PNG

The UGI-PNG LTIIP is a five-year plan that allows UGI-PNG to replace an average of 17 miles of pipeline per year. Further, UGI-PNG plans to spend nearly $23 million per year on pipeline replacements, service line improvements and safety device installations over the five-year period. The company’s DSIC mechanism may be implemented once the company files a tariff. As a result of the commitments made in a 2012 Settlement Agreement regarding a 2011 fatal natural gas explosion in Allentown, Pa., UGI-PNG could not recover money through the DSIC until April 1, 2015.

UGI-PNG provides service to approximately 167,000 customers in 13 counties in northeastern Pennsylvania.

UGI-CPG

The LTIIP of UGI-CPG will allow the company to replace an average of 17 miles of pipeline per year during a five-year period. Further, UGI-CPG plans to spend nearly $14 million per year on pipeline replacements, service line improvements and safety device installations over the five years. The company’s DSIC mechanism may be implemented once the company files a tariff. As a result of the commitments made in a 2012 Settlement Agreement regarding a 2011 fatal natural gas explosion in Allentown, Pa., UGI-PNG could not recover money through the DSIC until April 1, 2015.

UGI-CPG provides natural gas service to approximately 81,000 customers in 36 counties across Pennsylvania.

Act 11 requires, among other things, that utilities file LTIIPs as part of any action to establish a DSIC to recover reasonable and prudent costs incurred to repair, improve or replace certain eligible distribution property that is part of a utility’s distribution system.

As of Jan. 1, 2013, public utilities could petition the Commission for approval to establish a DSIC. Petitions must contain the following elements: 1) an initial tariff that complies with the Model Tariff adopted by the Commission; 2) testimony, exhibits or other supporting evidence demonstrating that the DSIC is in the public interest; 3) a long-term infrastructure improvement plan; 4) certification that a base rate case has been filed within the past five years; and 5) any other information required by the Commission. The petition must demonstrate that granting the petition and allowing the DSIC to be charged will accelerate the replacement of infrastructure.

On Feb. 14, 2012, Governor Corbett signed Act 11 of 2012, which allows jurisdictional water and wastewater utilities, natural gas distribution companies, city natural gas distribution operations and electric distribution companies to petition the Commission for approval to implement a DSIC. Under the law, the DSIC must be designed to provide for "the timely recovery of the reasonable and prudent costs incurred to repair, improve or replace eligible property in order to ensure and maintain adequate, efficient, safe, reliable and reasonable service.”

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.

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Docket Nos. P-2013-2397056, C-2014-2399316, C-2014-2401382, P-2013-2398835, C-2014-2399319, C-2014-2401378

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