Today, the UGI natural gas utility companies (UGI) submitted a proposal to the Pennsylvania Public Utility Commission (PUC) to launch a pilot program designed to provide natural gas service to communities which are currently unserved or underserved. UGI plans to fund the pilot program at a level of $15 million a year for five years.
UGI’s proposed Growth Extension Tariff, also known as GET Gas, allows UGI to spread the cost burden for new main extensions to the group of new customers connecting to the new main. The proposal also allows the payment by a surcharge over time, avoiding significant up-front cost.
Most new customers connected under the GET Gas program will be able to use a portion of the savings generated from converting to natural gas service to offset the GET Gas surcharge amount. Substantial up-front contributions where a gas main extension is required typically deter customers from connecting to natural gas utility distribution systems.
UGI proposes that its pilot program be available to potential customers in all three of its natural gas distribution companies: UGI Utilities – Gas Division, UGI Penn Natural Gas and UGI Central Penn Gas. Together, the UGI natural gas utility companies currently serve approximately 587,000 customers in 45 counties in Pennsylvania.
“Natural gas is one of the cleanest, most abundant and least expensive energy sources in Pennsylvania,” Robert F. Beard, UGI President and CEO, said. “In recent years, UGI has seen record demand from consumers requesting conversions to natural gas from other fuels. The GET Gas proposal is an innovative program designed to allow an expanded number of consumers greater access to natural gas. We’ve heard from those who would like to be our customers, and we are responding with this proposal that will let us increase our reach.”
While there is no prescribed timeframe for the PUC to review and act on this proposal, UGI is hopeful that GET Gas can be approved sometime in the fall with implementation beginning in 2014.
Why is UGI filing a tariff with the Pennsylvania Public Utility Commission?
The UGI Growth Extension Tariff (GET Gas) is designed to provide natural gas service to additional areas which are currently unserved or underserved.
Will customers in all three UGI natural gas service areas be able to participate?
GET Gas will be available to customers of UGI Utilities – Gas Division, UGI Penn Natural Gas and UGI Central Penn Gas.
How will the GET Gas program work?
GET Gas customers will pay a monthly surcharge over a 10-year-period to cover the cost of the main extension rather than making a substantial up-front contribution.
The surcharge GET Gas customers will pay will be less than the up-front contribution required under UGI’s traditional line extension policy. Under the current policy, a customer would be required to pay the cost of the main extension prior to construction, without any assumption that other customers may avail themselves of natural gas service at a future date. GET Gas assumes all customers receiving service from the new facilities will share the cost of the facilities and allows the cost of the extension to be paid over time.
The typical Get Gas customer will be able to use a portion of the savings generated from converting to natural gas to offset the surcharge. The monthly surcharge will vary based on the UGI natural gas utility service area.
Will UGI’s existing line extension policies be changed by the GET Gas proposal?
No, UGI’s existing line extension policies are not being changed by GET Gas. GET Gas will simply add another option to address situations where a line extension cost exceeds $15,000.
However, customers under the current line extension policies can help mitigate their initial investment by financing their heating equipment and line extension contribution costs through Keystone HELP, a low-interest home energy loan program supported by the Commonwealth of Pennsylvania.
How do participants qualify for the UGI GET Gas pilot program
GET Gas proposes that UGI may extend natural gas service to unserved and underserved areas where there is a reasonable prospect that 50 percent or more of existing homes along the main extension will convert their primary heating service to natural gas and expected costs per new customer does not exceed $10,000.
Doesn’t UGI currently conduct new line extension programs?
UGI currently invests $40 million annually to extend natural gas service to new customers. If the GET Gas pilot proposal is approved, UGI would designate an additional $15 million each year for five years specifically for this program.
Why doesn’t UGI extend natural gas service to whoever wants it?
UGI’s tariff extension rules protect existing customers from bearing the cost of uneconomic main extensions. Natural gas main extensions typically cost between $500,000 and $1 million per mile, sometimes more. It would be unfair to current customers and contrary to public policy for UGI to extend mains where it is not economically feasible to do so.
How will UGI select the areas or communities for GET Gas?
Because GET Gas is a pilot program, UGI will not be able to reach all areas or communities that are potential candidates for GET Gas. Some factors that will be considered include, but are not limited to, proximity to existing gas mains, housing/business density, assumptions related to percentage of households/businesses likely to convert to natural gas, road restoration/permitting fees, etc.