Recommended Decision Would Set Bypassable Gas Procurement Charge at UGI Companies

A recommended decision from a Pennsylvania ALJ would establish the level of new, bypassable Gas Procurement Charges at the three UGI natural gas distribution companies in Pennsylvania.

The Gas Procurement Charges unbundle certain costs related to the procurement of default service gas supply from base distribution rates.

Specifically, the recommended decision would adopt, without modification, an unopposed settlement to 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).

The settlement had been first reported in Matters.

As previously reported, the settlement doubled 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.

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

Docket R-2012-2314224 et. al.