UGI again hikes natural gas rates Price of heating home in county hits 15-year high

Source: Intelligencer Journal Lancaster, PA Publication date: 2001-03-02 Arrival time: 2001-03-03

If you heat your home with natural gas, UGI Utilities is going to take an even bigger bite out of your monthly budget. On Thursday, Lancaster County's major natural gas supplier said it hiked monthly gas rates for the average home heating customer 22 percent. That's a $20.42 increase, boosting the average monthly residential gas bill to a whopping $113.30 -- the highest price in at least 15 years.

"This may be a historic high," UGI spokeswoman Deborah R. Leuffen said of skyrocketing gas prices. She said UGI has not charged consumers this much for natural gas since the early to mid-1980s.

As the wholesale price UGI pays for gas has risen steadily since January 2000, UGI has passed on the increases to its 46,300 residential, commercial and industrial customers here by hiking rates quarterly. Business customers are paying more for gas based on consumption levels.

Last March, local UGI customers who heat their homes with gas were paying an average of $74.21 a month. With the latest rate hike, their monthly bills are now 53 percent more.

Mother Nature has made matters worse. Record cold weather across the United States has wreaked havoc on household budgets, causing a spike in demand and prices for gas and other heating fuels. From December to January, for example, the wholesale pipeline price UGI pays for gas rose more than 50 percent.

While the utility buys much of its winter gas supply through fixed- price contracts, some gas is purchased on the open market at prevailing prices.

Thursday's rate hike will enable UGI to recover its increased costs from gas purchased since Dec. 1 and also adjusts the utility's rates for projected market prices through November.

"The good news is that today's high prices have stimulated drilling activity in North America," Leuffen said. "Increased supply should provide an initial step toward price moderation."

Phil Flynn, senior energy analyst for Alaron Trading Corp., said there's a "crisis" in the marketplace that won't be resolved until gas supplies increase substantially.

Nonetheless, Leuffen said, there are "encouraging" signals that wholesale prices will begin a slow decline that should bode well for gas prices next winter.

"I certainly don't have a crystal ball," the UGI spokeswoman said, "but we are optimistic rates will stabilize or even decline."

Reading-based UGI sells natural gas to 265,000 customers in 14 southeastern Pennsylvania counties.

Publication date: 2001-03-02

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-- Martin Thompson (mthom1927@aol.com), March 03, 2001