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UGI Requests Natural Gas Base Rate and Purchase Gas Cost Changes

by UGI Utilities, Inc.

Jan 28, 2019

Residential, Commercial and Industrial Customer in the UGI Gas South District Impacted by Request

UGI Utilities, Inc.’s Gas Division (UGI) has filed a request with the Pennsylvania Public Utility Commission (PUC) to increase its base rates for residential, commercial and industrial customers by $71.1 million annually. The requested increase would recover UGI’s ongoing costs related to system improvements and operations necessary to maintain safe and reliable natural gas service.

UGI is also requesting changes in purchased gas costs, the cost of the natural gas commodity consumed by the customer, for UGI Gas customers as well.

As part of its filing, UGI is proposing that its distribution and gas cost rate structures, currently separate for three rate districts, be consolidated into one across the 45 counties UGI serves in Pennsylvania. The UGI Utilities – South District is the former UGI Gas Division.

“This rate increase will provide the funding necessary for important distribution system improvement activities and technology system replacements,” Paul Szykman, UGI Chief Regulatory Officer, said. “In addition, establishing uniform distribution rates and gas costs across our service area will benefit UGI customers through enhanced administrative efficiency, unified supply planning, cost savings and communications. Even with this
increase, total average bills for our residential heating customers remain lower than those of 10 years ago.”

The Company’s filing includes over $1.0 Billion in system investments for system infrastructure, facilities and information technology investments which are not yet included for recovery in current rates.

“We are currently investing over $350 million annually in capital projects to upgrade our distribution and technology systems,” Szykman said. “UGI is well underway on an aggressive infrastructure betterment initiative that is replacing all non-contemporary pipelines with those made of contemporary materials.”

The UGI rate increase request will impact both the delivery charge portion of a customer’s bill as well as the purchased gas commodity charge. The delivery charge provides a utility with the funds needed to own, operate and maintain the gas distribution system and provide customer service and emergency response services. The purchased gas commodity charge reflects the actual cost the Company pays to purchase gas on the
wholesale market, with no profit mark-up.

Assuming the full amount of the proposed rate increase is granted and that our proposal to create uniform rates is adopted, customers in the UGI Gas – South District would see the following rate impact:

Residential: The total bill for a residential customer using 62.3 ccf per month would increase from $62.45 to $72.93 per month or by 16.8%. This is based on a 20.2% increase in the distribution rate and a 3.4% decrease in the purchased gas cost rate.

Commercial: The total bill for a commercial customer using 27.1 mcf per month would increase from $246.63 to $250.24 per month or by 1.5%. This is based on a 5.2% increase in the distribution rate, and a 3.7% decrease in the purchased gas cost rate.

Industrial: Rates for an industrial customer using 58.5 mcf per month would decrease from $514.50 to $497.69 per month or by 3.3%. This is based on a 0.6% increase in the distribution rate, and a 3.8% decrease in the purchased gas cost rate.

In addition to the changes to the distribution rate and the purchased gas cost rate, UGI is proposing to extend the existing temporary federal tax credit through the 12-month period following the effective date of new rates. As proposed, this credit will reduce the distribution rate portion of customer bills by 4.50%.

UGI is requesting that the new gas rates take effect March 29, 2019. However, the PUC typically suspends the effective date for general base rate proceedings to allow for investigation and public hearings. The PUC proceeding is expected to last approximately nine months, which would delay implementation of the new rates until late October 2019.

Customers and interested parties may view UGI’s base rate filing materials on the UGI website at (www.ugi.com) and clicking on the “rate filing” tab on the home page.

Customers with questions may also call UGI toll-free at 1-800-276-2722 to receive further information on the proposed rate increase or to find out what actions they make take.

UGI Utilities, Inc. – South District serves more than 392,000 customers in 16 counties in southcentral Pennsylvania. UGI Utilities, Inc., Gas Division, serves more than 642,000 customers in 45 counties across Pennsylvania.

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