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PUC Approves UGI Electricity Generation Rate Increase

Wilkes-Barre, PA (June 22, 2006) – The Pennsylvania Public Utility Commission (PUC) has approved new electric generation rates for UGI Utilities, Inc., – Electric Division (UGI), effective January 1, 2007. All metered residential, commercial and industrial customers who purchase generation services from UGI will be affected by the increase.

Based on this decision, the bill for a typical residential customer who uses 500 kWh per month will increase $19.13 in 2007, $2.42 in 2008, and $.27 in 2009. The PUC approved these increases as part of a settlement between UGI, the Office of Consumer Advocate, the Small Business Advocate and Constellation Energy.

According to Robert Stoyko, Vice President – Electric Distribution, Pennsylvania customers have benefited over the past ten years by Customer Choice legislation that established rate caps during a transitional period to a competitive market. While UGI exited its generation rate cap in May 2003, prudent electricity purchases and relatively stable wholesale prices enabled UGI to enter into multi-year settlements that held generation rate increases to modest levels in 2004, 2005 and 2006. However, since 2004, the date of UGI’s last settlement, the market has become much more volatile.

“We are sensitive to the impact that this increase will have on our customers,” Stoyko said. However, dramatic increases in wholesale prices — driven by the rising cost of fuels used to generate electricity such as natural gas, oil and coal — have exceeded our ability to absorb these rising costs.” Stoyko noted that wholesale electricity costs have increased approximately 60% since 2004.

Under the Customer Choice law of 1996, customers have the option of purchasing their electric generation from alternate suppliers. However, the competitive market in UGI’s service territory has not developed as expected. Customers who continue to purchase their electric generation from utilities such as UGI pay what is known as Provider of Last Resort (POLR) rates. Once a company exits the generation rate cap, as UGI has, POLR rates are required to reflect market pricing.

Based on the PUC decision, residential customer bills will increase 34.54% in 2007, 3.25% in 2008 and 0.35% in 2009. The bill for a typical residential customer using 500 kWh per month would rise from $55.38 to $ 74.51 in 2007, $76.93 in 2008, and $77.20 in 2009. Customer bills will also vary based on specific usage patterns.

“Since the rate change will not go into effect until January 2007, we encourage customers to take this time to plan ahead for higher energy costs and consider additional conservation measures,’’ Stoyko said. “UGI will provide customers with additional information over the coming months to help them better manage their electric bills.”

Customers are encouraged to:
Conserve Energy by adjusting thermostat settings and limiting hot water usage.
Weatherize Homes with added insulation and caulking to seal air leaks.
Tune-up Heating & Air Conditioning Systems for improved efficiency.

Customers who experience difficulty paying their bill should:
Enroll in Budget Billing to spread utility bills more evenly over 12 months.
Apply for Energy Assistance if on a limited income. Call 1-800-UGI-WARM for information on customer assistance programs.

UGI Utilities Electric Division serves 62,000 customers in portions of Luzerne and Wyoming counties. Additional information about UGI is available at www.ugi.com.

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