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Natural Gas Rates to Rise 11% on September 1

Reading, PA (August 31, 2005) – As a result of higher wholesale gas prices, UGI Utilities announced that its purchased gas cost rates will increase on September 1, 2005. As a result, the bill for a typical residential heating customer will increase approximately 11.3%, from $118.29 to $131.61 per month.

Wholesale natural gas prices have risen significantly this summer based in part on high world oil prices, a growing economy and a hotter than normal summer across the nation. According to Vicki O. Ebner, UGI’s vice president of marketing & gas supply, “Natural gas prices are increasing because the demand for clean burning natural gas continues to rise faster than producers’ ability to bring new supplies to market.” The Energy Policy Act of 2005 will help increase natural gas supplies in the long-term but will not help lower prices this winter. Ebner also said that “While the recent production disruption in the Gulf of Mexico from Hurricane Katrina has caused all energy prices to spike in the past few days, UGI’s rate increase is driven primarily by the rise in wholesale prices that occurred before Katrina.”

Utilities purchase natural gas on behalf of customers and pass the actual cost of the natural gas through to them without any mark up. The Pennsylvania Public Utility Commission reviews each utility’s gas cost rates and gas purchasing practices annually. According to Ebner, UGI works to maintain reliable service and to stabilize prices by purchasing some natural gas during warm weather months and storing it underground and also using financial tools to lessen the effect of sharp swings in wholesale gas prices. Utilities earn their income through a distribution charge for the delivery of gas to customers and a customer charge for maintaining their pipeline system and providing customer service. UGI has not increased these rates since 1995.

Customers should begin to budget and prepare now for higher heating bills. With this increase UGI’s rates are nearly 16% higher than they were last winter. UGI encourages customers to conserve energy and consider efficiency improvements in their home. All customers are encouraged to sign up for UGI’s free budget billing program, which spreads bills out over a 12-month period, reducing the impact of high winter heating bills. Customers with a limited or fixed income should call UGI at 1-800-UGI-WARM to determine if they are eligible for one of several energy assistance programs. Finally, any customer who is behind on their gas bills should contact UGI at 1-800-276-2722 as soon as possible to discuss a payment arrangement with the utility.

UGI Utilities’ headquarters is located in Reading, Pennsylvania. The utility serves 300,000 customers in 14 southeastern Pennsylvania counties. Additional information about UGI is available at www.ugi.com.

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