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Four Years After Fatal Pennsylvania NatGas Blast, UGI Can Recoup Costs

The Pennsylvania Public Utility Commission (PUC) has voted unanimously to approve distribution system improvement charges (DSIC) that would allow two UGI Corp. subsidiaries to recover costs from customers under their long-term infrastructure improvement plans.

It is the first time since 2012 that the companies would be able to implement the charges. After a 2011 natural gas explosion in Allentown, PA, that killed five people, UGI agreed to invest capital in an infrastructure replacement program as part of a settlement under which it could not recover money with a DSIC until this year (see Daily GPIFeb. 11, 2011). Once UGI Penn Natural Gas Inc. (UGI-PNG) and UGI Central Penn Gas Inc. (UGI-CPG) file tariffs with the PUC they can implement the charges.

The PUC approved the LTIIPs last year (see Daily GPISept. 15, 2014). UGI-PNG's plans call for replacing an average of 17 miles of pipeline per year. It would spend nearly $23 million annually on pipeline replacements, service line improvements and safety device installations over a five-year period. UGI-CPG's plans call for spending $14 million annually over a five-year period for similar upgrades. 

Combined, the utilities serve 248,000 customers in the state.

This year, as the need to replace aging infrastructure in the state grows, the commission approved another LTIIP and heard a request to recover costs for more immediate projects.

In May, the PUC approved Philadelphia-based PECO Energy Co.'s LTIIP, which is expected to cost the company more than $534 million and take two decades to complete (see Daily GPIMay 18). Columbia Gas of Pennsylvania has also asked the commission for a $46.2 million annual revenue increase through customer rate increases to help fund $186 million in infrastructure and safety upgrades that it has planned for its 26-county service area this year (see Daily GPIMarch 24).

PECO, Columbia and three UGI subsidiaries, including UGI-PNG and UGI-CPG, are among the state’s ten major natural gas distribution companies, defined by the PUC as those with more than $40 million in gross annual revenues.

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