Pennsylvania's Public Utility Commission has approved a $75 million UGI pilot program designed to connect to new natural gas main extensions residential and small business customers that do not currently have access to gas service.

The Growth Extension Tariff (GET Gas) will allow customers to pay a monthly surcharge, avoiding significant up-front cost, when connecting to a new natural gas main extension, UGI said. The surcharges will remain fixed over a 10-year period and will remain with the service location if a customer moves. Areas served under the program must meet certain minimum economic requirements, including their proximity to existing gas mains and population density, in order to qualify.

UGI plans to fund the pilot program at an annual level of $15 million a year for five years, in addition to the more $40 million it spends each year to extend natural gas service to new customers. The Reading, PA-based company expects that the GET Gas program will be available to customers by early fall.

"Due in part to the increasing availability of  reasonably priced natural gas from Marcellus Shale, natural gas is one of the cleanest, most abundant and least expensive energy sources in Pennsylvania," said UGI’s Robert Stoyko, vice president of customer relations. "In recent years, UGI has seen record demand from consumers requesting conversions to natural gas from other fuels."

The pilot program will be available to potential customers in all three of UGI's natural gas distribution companies -- UGI Utilities-Gas Division, UGI Penn Natural Gas, and UGI Central Penn Gas -- which currently serve a total of about 600,000 customers in 45 Pennsylvania counties.

Increased production in the Marcellus and Utica shale formations has pushed down the price customers are paying for natural gas as more utilities utilize local gas produced in the Appalachian Basin (see Shale Daily, Dec. 11, 2013). According to officials at the PUC, purchased gas cost rates and tariffs have declined by as much as 45-50% since 2008, attributable in part to growing shale gas production in the region. As a result, UGI customer's recently their bills decrease by 6.3%.