UGI Pennsylvania Announces Gas Rate Cut

Natural Gas PipelineA rate cut is coming for UGI Utilities customers. UGI  will propose a 3.4% decrease in its rates, effective Dec. 1.  The gas utility credited lower wholesale natural gas prices, stemming from increased supplies. The change, is subject to the state Public Utility Commission’s approval. If approved, gas would be its lowest point since 2002.

“An abundant supply of natural gas is allowing us to continue to pass these savings on to our customers,” said UGI’s Vicki Ebner. “Thanks in part to Marcellus Shale production, natural gas prices are at historic lows,” said Ebner, a senior vice president. Since gas peaked at $151.47 in June 2008, UGI has cut its rates eight times (including Thursday’s proposed trim). Those actions were offset slightly by one small increase last summer. Most recently, these reductions include a 4.3 percent drop on March 1 and a 13.5 percent cut last Dec. 1.

To enact the change, they ares asking the PUC to adjust its “purchased gas cost” — UGI’s cost to obtain natural gas on the wholesale market. The purchased gas cost accounts for about two-thirds of the customer’s total bill. By law, UGI must pass this cost directly to customers without markup, meaning the utility is not harmed or helped by changes in this cost. Instead, UGI makes its profit on delivering the gas to homes, businesses and other users, not by selling the gas supply. The gas utility has  320,000 customers in 15 counties.

Since gas supply prices fluctuate when the customer buys it from the utility, in this case UGI, fixed price contracts will protect gas customers from price fluctuations for a much longer term.

For information on obtaining fixed price quotations for electricity or natural gas, contact Better Cost Control, your independent electricity and natural gas broker and consultant.