Press Release

HARRISBURG – Because the increases reflect a rise in direct operating costs, the Pennsylvania Public Utility Commission (PUC) today approved annual increases for 12 natural gas companies while urging consumers to make conservation a priority and sign up for budget billing with their utility.

“Our hearts tell us we should not do this, but our brains and experience tell us this is something we must do,” said Commission Vice Chairman James Cawley. “Delaying the cost to customers until after winter will only create an avalanche of bills for next summer. A better answer is conserving energy and encouraging all customers to enroll in budget billing programs.”

Budget billing spreads monthly payments over the year allowing consumers to pay similar amounts each month. While the overall amount due at the end of the season will be the same, the amount due will be spread out over a greater period of time rather than over the winter months. This plan makes the amount due more predictable and affordable. It is an effective way to deal with high natural gas bills this winter.

The Commission approved the increases by a vote of 4-1. Commission Chairman Wendell F. Holland urged the Commission to defer the collection of the increases until April 1.

“I wanted to show compassion by balancing the needs of utilities with the needs of consumers,” Chairman Holland said. “A full pass through of these increased natural gas costs will create an enormous strain for many end use customers throughout the Commonwealth. I proposed that we defer recovery of the requested increases and place that amount into a deferred account for recovery in the future.”

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. 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 those costs.

Many of the rate increases impacted small natural gas companies with limited financial resources.  The Commission was concerned that if the companies were not able to pass on actually incurred costs such as the Gas Cost Rate (GCR), cash flow problems could ensue, hampering their ability to purchase natural gas and maintain reliable service in the coming months.

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.

The Commission is seeking to prevent a magnification of the price increases and interest charges for consumers in the future.

Natural gas utilities may file for a cost recovery increase annually – either a Gas Cost Rate (GCR) or Purchased Gas Cost (PGC) tariff. Larger companies may file with the Commission quarterly for updates to the GCR. In doing so, the utility company recalculates its rates to reflect what it paid for the natural gas, and includes a reconciliation of undercollections or overcollections resulting from differences in actual sales and actual gas costs from prior projections. Valley Energy’s request is an interim increase.

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.

For UGI and PPL Gas, the rates will be effective Dec. 1. For the remainder of the companies, the new rates are effective Nov. 1. Here is a link to the chart with the name of the utility and the new rates.

On Sept. 9, 2005, the PUC directed electric, natural gas and water utilities to coordinate with the PUC, consumer advocates and community-based organizations to educate Pennsylvanians about changes in the law dealing with utility shut-offs. 

The message is: “Prepare Now” for higher energy costs this winter.  Learn about changes in the law related to utility shut-offs and know your rights.  Save money by learning how to conserve energy.  Budget billing and special programs can help you manage your bill.  Heat your home safely.  “Prepare Now,” before cold weather arrives.  Visit http://www.puc.state.pa.us/utilitychoice/preparenow/preparenow_index.aspx or call the PUC at 1-888-PUC-FACT.

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-00051903, M-00051908, M-00051909, M-00051910, M-00051911, M-00051912, M-00051913, M-00051914, M-00051915, M-00051916, M-00051917, M-00051888, R-00050540 and R-00050539