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Message from UGI Utilities President and CEO

Message from UGI Utilities President and CEO

Robert Beard, President and CEO - UGI Utilities

Last month you received a notice with your UGI natural gas bill informing you that UGI Utilities, Inc.’s Gas Division (UGI) filed a request with the Pennsylvania Public Utility Commission (PUC) on January 28, 2019 to increase natural gas distribution rates by $71.1 million. This request would change both distribution rates and purchased gas cost (PGC) charges for all UGI Utilities natural gas customers. UGI currently operates three natural gas Rate Districts: the Northern District (formerly UGI Penn Natural Gas); the Central District (formerly UGI Central Penn Gas) and the Southern District (formerly UGI Gas Division). UGI electric-only customers are not affected by this rate increase request.

This message provides you with additional information regarding our base rate request that I hope you find helpful in explaining our requested rate increase.

There are several reasons UGI is making a rate change filing at this time. The base rate increase will fund ongoing system improvements necessary to maintain safe and reliable natural gas service, and support accelerated capital investment to maintain and improve system reliability by replacing aging infrastructure. The UGI rate filing also will update certain terms and conditions of service, eliminate redundancy and differences between rate districts, and address program commitments made in other Commission proceedings. Further, the rate filing will report on the Company’s GET Gas pilot natural gas main extension program and includes a request to extend the pilot for another five years. Finally, the Company rate change filing incorporates new investments related to distribution infrastructure for growth and replacement of operating facilities.

UGI seeks PUC approval to realign both its distribution and gas cost rate structures, currently in the three separate Rate Districts, into one consolidated rate structure across the UGI service territory. This consolidation will create uniform distribution rates and purchased gas cost rates so that all customers of a UGI Gas rate class, in all three Rate Districts, will be charged the same amount for the same level of service. As you are aware, distribution rates recover the costs associated with the delivery of natural gas to customers, whereas purchased gas cost rates recover the costs of purchasing the commodity natural gas from the wholesale supply market.

UGI also is requesting an extension of the temporary federal tax credit adjustment associated with the passage of the Tax Cut and Jobs Act (TCJA). The proposed extension of the federal tax credit adjustment will reduce customer bills over the 12-month period following the effective date of new rates.

The UGI base rate increase request includes funding for the expansion of several programs that provide benefits to consumers. For example, we request PUC approval to extend our natural gas Energy Efficiency and Conservation (EE&C) program which promotes and rewards customer efforts aimed at increasing their efficient use of natural gas to customers in the UGI North and South Rate Districts, to customers residing in our Central Rate District.

We are also proposing expansion of our Technology and Economic Development (TED) program and our Growth Extension Tariff gas main extension program (GET Gas). The TED program provides needed rate flexibility to our business customers interested in developing technologies to meet competitive market conditions. Our GET Gas program is an innovative approach to expanding natural gas service to unserved or underserved communities within our service territory, thus providing access to low cost natural gas to more households.

Looking ahead, the PUC will conduct a proceeding to consider the UGI base rate increase request. The PUC proceeding will take many months to complete. Customers and interested parties may participate in the PUC proceeding. Information on how to participate is available on the UGI website at www.ugi.com/rate-filing.
You may also receive additional information about the UGI base rate increase request by contacting the UGI Call Center at 1-800-276-2722.

In closing, I want you to know that UGI’s number one priority is the safe and reliable delivery of natural gas to our customers and the many communities we serve. All of us at UGI work hard every day to serve you better while managing our system in a cost efficient manner. Thank you for entrusting us with your business.