Settlement Would More Than Double Bypassable Gas Procurement Charge at UGI Companies

Parties have reached an unopposed settlement that would establish the new, bypassable Gas Procurement Charge at the three UGI natural gas distribution companies in Pennsylvania that increases the bypassable Gas Procurement Charge from UGI's original proposal.

Specifically, the settlement will establish a Gas Procurement Charge (GPC) of $0.0400/Mcf at UGI Utilities - Gas Division (UGI), UGI Penn Natural Gas, Inc. (PNG), and UGI Central Penn Gas, Inc. (CPG).

Originally, the proposed bypassable Gas Procurement Charge at each company was $0.0114/Mcf at UGI, $0.0191/Mcf at CPG, and $0.0129/Mcf at PNG.

Among other things, the settlement doubles the unbundled labor and benefit costs associated with procurement to $787,000.

Additionally, under the stipulation, the UGI companies will unbundle $135,000, or approximately 77%, of shared Gastar system expenses associated with depreciation and vendor maintenance costs from base rates and include these costs in the GPC. Originally, Gastar system expenses were not proposed to be unbundled.

Furthermore, the settlement provides that the UGI companies will unbundle $888,000 of working capital costs from base rates and include these costs in the GPC. The working capital costs unbundled for UGI, PNG and CPG, respectively, are $419,000, $339,000 and $129,000.

In its original filing, the UGI companies did not propose to unbundle working capital costs from base rates. The UGI companies had said that under their Commission-approved tariff, they do not release storage capacity to retail suppliers, and as such, the utilities bear the working capital costs associated with gas in storage for both shopping and non-shopping customers

The settlement provides that it shall be without prejudice to any parties' rights to argue in any future proceeding that retail suppliers should bear working capital costs associated with gas in storage inventory; provided however that such future proceeding may only be either: (a) on or after November 1, 2014 or, (b) the next respective UGI distribution company base rate proceeding, whichever is earlier.

The UGI companies will allocate shared unbundled costs among the three companies pursuant to each company's actual 1307(f) Purchased Gas Cost (PGC) sales volumes for the 12 months ending September 30, 2012, with the exception of working capital costs. The PGC sales volumes (in Mcf) for UGI, PNG and CPG, respectively, are 23,316,713, 16,836,467 and 7,627,832.

UGI - Gas Division serves approximately 350,000 customers in fourteen counties in eastern Pennsylvania. PNG serves approximately 160,000 customers in thirteen counties in northeastern and central Pennsylvania. CPG serves approximately 77,000 customers in thirty-five counties throughout Pennsylvania

The settlement was signed by UGI Utilities, Inc. - Gas Division, UGI Penn Natural Gas, Inc., UGI Central Penn Gas, Inc., the Office of Consumer Advocate, the Office of Small Business Advocate, and Shipley Choice LLC. The Retail Energy Supply Association and South Jersey Energy Company do not oppose the settlement.

Docket R-2012-2314224 et. al.