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PG Energy Files Request for Base Rate Increase

13 Apr 2006

Wilkes-Barre, PA (April 13, 2006) – PG Energy announced today that it has filed a request with the Pennsylvania Public Utility Commission to increase base gas rates effective June 12, 2006. PG Energy last filed for a base rate increase on April 3, 2000.

If approved by the PPUC, the proposed increase would provide PG Energy with $29,788,902 or about 8.6 percent in additional annual revenues. The proposed rates include an allocation for state and federal taxes that will account for nearly $12.1 million or 41 percent of the revenues created by the proposed rate increase. The requested rates in the PG Energy rate area will increase the average residential monthly heating bill by $12.15 or 8.64 percent, from $140.62 to $152.77. The average residential heating customer uses approximately 97 hundred cubic feet (ccf) of natural gas each month.

Commercial customers using approximately 438 ccf of natural gas each month would see their average monthly bills increase by $39.06 or 6.62 percent, from $590.36 to $629.42, while industrial users consuming approximately 3,160 ccf feet of natural gas per month would see their average monthly bill increase by $201.49 or 5.06 percent, from $3,979.23 to $4,180.72. The exact amount of the increase would depend on customer usage. “Despite the request for a base rate increase, PG Energy’s gas costs remain among the lowest of natural gas suppliers in Pennsylvania,” says Bruce Davis, vice president of gas supply and marketing.

Harry Dowling, PG Energy’s president and chief operating officer, explains that the base rate request follows a six-year period in which the company successfully avoided the need to pursue an increase in base gas rates. “This was due to the efforts of our employees who did an outstanding job in controlling costs and improving operating efficiencies while focusing on the continuation of safe and reliable gas service,” says Dowling. “But, we’ve continued to incur higher operating costs while making significant capital investments for the benefit of our customers, and that has now made it necessary for us to file a base rate increase request.”

The rate request also affects the tariff applicable to the Honesdale rate area, which was last adjusted in 1999, and in particular proposes to bring Honesdale’s rates more in line with the remainder of the PG Energy rate area. Customer impacts in Honesdale will therefore vary from those applicable to PG Energy tariff customers.

The proposed increase in annual revenue would allow PG Energy to recover costs associated with major improvements to its 2,547-mile distribution system, as well as operating and maintenance expenses.

The company adds, separate from the base rate filing, PG Energy filed two petitions with the PPUC this year to reduce its gas cost for customers, as mild winter weather led to an increase in natural gas supplies. Those petitions were approved on February 9 and March 1 and the savings were passed directly on to customers; there is no markup on the price of gas and PG Energy customers pay exactly what the company pays for it.

For those customers who wish to obtain additional information on the proposed rate increase or to find out what actions they may take in regard to the filing,
PG Energy has established a toll-free number at 1-866-338-2080.

PG Energy, headquartered in Wilkes-Barre, Pennsylvania, is a natural gas operating division of Southern Union Company (NYSE:SUG). PG Energy serves approximately 158,000 customers throughout northeastern and central Pennsylvania, including the cities of Scranton, Wilkes-Barre, Bloomsburg and Williamsport.

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