UGI Utilities Inc.’s desire to permanently charge customers more for natural gas is delayed until October.
The state Public Utility Commission voted 5-0 Thursday to suspend the company’s request for base-rate hikes that would raise almost $110.4 million, or 9.7%, more in revenues annually.
The suspension gives commission staff and consumer and business advocates a chance to investigate whether the hikes are warranted.
Under UGI’s Jan. 27 proposal, the average residential customer would pay $115.74 a month, up $11.27, or 10.8% a month; the average business customer would pay $331.80 a month, up $26.36, or 8.6%; and the average industrial customer would pay $823.42 a month, up $57.43, or 7.5%, according to the filing.
The utility wanted the new rates to go into effect March 28, but expected a delay because the PUC routinely suspends hikes for investigation, according to a Jan. 27 company news release. The PUC said Thursday to expect a decision by Oct. 28.
Based in Denver, a Lancaster County borough, UGI serves more than 740,000 natural gas and electric customers in 46 Pennsylvania counties and one in Maryland.
State law allows natural gas utilities to raise rates twice a year — June 1 and Dec. 1 — based on whether wholesale gas costs rise or fall, but this rate hike seeks permanently higher rates related to gas delivery and unrelated to wholesale cost.
Rising natural gas costs forced average UGI residential bills up twice last year to $104.47 from $90.94 a month, or 14.9%. Customers who buy gas from suppliers other than UGI could see different hikes.
The utility says it needs higher permanent rates for four main reasons. They are:
- To earn a fair return on investments. The utility projects a 7.56% profit based on current rates. Without higher rates, UGI says profits will decline and the utility will increasingly have trouble attracting money to pay for upgrades that keep the distribution system reliable.
- To pay for the upgrades at a commission-approved accelerated pace. The company’s Third Long Term Infrastructure Improvement Plan calls for spending about $1.7 billion on upgrades between 2025 and 2029. The utility is eliminating cast iron, steel and some plastic mains in its system.
- To enhance information technology systems, business processes and personnel effectiveness. That includes new hardware and software that will help better manage projects, track distribution systems, cybersecurity, customer communications and billing.
- To pay competitive salaries and cover other higher employee costs to run the utility properly.
Consumer advocates have already weighed in against the higher rates.
Last week, Scranton officials called for a public hearing on the rate hike request in the city.
“We're not going to sit by and be pushed around and be forced to have these great increases forced upon our residents, not without fighting,” City Councilman Bill King said.
A PUC administrative law judge will get the case and schedule hearings.
