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Lower Gas Prices Allow PECO to Lower Commodity Charge by 6.5%

Mild winter weather and sharply falling commodity costs have led utilities across the country to reduce their rates. Philadelphia-based PECO said last week that it will reduce its commodity rate by 6.5% as of March 1, resulting in lower natural gas bills for the company's suburban natural gas customers. The commodity charge makes up more than 80% of the total gas rate, which will drop by 5.2%.

Like most gas utilities, PECO said it has seen a reduction in both the current market price of gas and in the longer-term projections of future gas prices during the next year. The utility said that this has been primarily driven by continued recovery from the devastating impact of Hurricanes Katrina and Rita last fall, coupled with warmer-than-normal temperatures this winter, which reduced demand.

According to data from the National Weather Service, the heating season since October thus far has been nearly 14% warmer than normal with only the month of December consistently colder.

The commodity portion of PECO's bill will drop from $1.37 per ccf currently to $1.28 per ccf. It reflects PECO's actual costs for buying gas on the wholesale market on behalf of its retail customers. PECO's customer service and delivery charges, which have not increased since 1988 and remain among the lowest in Pennsylvania, will stay at $0.28 per ccf.

Under the new rate, the typical residential customer that uses 100 ccf of gas a month will save about $9 on each bill, although savings will be greater during heating months. As an electric and natural gas utility subsidiary of Exelon Corp., PECO serves 1.6 million electric and 470,000 natural gas customers in southeastern Pennsylvania.

PECO said the warmer weather has softened the effect of the higher gas prices on consumer bills. PECO's natural gas "throughput," or delivery to customers (10.9 Bcf), was 17% lower in January than in December and 26% lower than the same period a year ago. Only in recent weeks have wholesale natural gas prices dipped below levels prior to the two hurricanes.

"We're very pleased the gas market has improved since the hurricanes last fall, and the impact on consumers can be eased somewhat. Heating costs are tough to manage for some of our local customers, and this will provide a bit of relief each month," said Denis O'Brien, PECO president. "Still, the remainder of February and March could bring cold weather, so anyone who thinks that they will have trouble paying their bills are urged to let us know immediately."

O'Brien said the company expects wholesale natural gas to become more stable over the next several months. However, consumers still are paying more than in past winters and they should remain focused on saving energy. He noted that consumers can enroll in the company's budget billing plan at http://www.peco.com/ehome, and customers can call (800) 774-7040 for information about the customer assistance program for qualified households based on income and family size.

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