The Pennsylvania Public Utility Commission (PUC) said late last week it has voted 5-0 in favor of launching an investigation into a PG Energy request to increase gas rates by about $29.8 million. Based in Wilkes-Barre, PA, PG Energy is a division of Southern Union Co.

The company’s proposal would increase the annual bill for an average customer using 9,700 Mcf of natural gas by about $146 — or by about 8.64%. The PUC noted that the rate bump would increase the average annual residential bill from approximately $1,687 to $1,833.

As a result of the vote for investigation, PG Energy’s proposal is suspended for up to seven months. The commission action assigns the matter to a PUC administrative law judge for a recommended decision or settlement. The PUC has until Jan. 12, 2007 to make a final decision at a public meeting in Harrisburg, PA.

According to the company’s filing, the proposed increase would allow the company to earn a fair return on the value of its gas utility property by offsetting the increasing costs of providing natural gas service. PG Energy said the increase would also maintain adequate coverage on all outstanding securities and attract investment capital at reasonable costs.

The utility serves about 160,880 customers throughout northeastern and central Pennsylvania, including the cities of Scranton, Wilkes-Barre, Bloomsburg and Williamsport.

Earlier in the month, the PUC denied a request by UGI Corp. and Southern Union Co. to establish an expedited schedule for consideration of the proposed UGI purchase of PG Energy’s natural gas assets from Southern Union Co.

“We are mindful of the necessary balance that must be struck between allowing for quick consideration of a merger proposal and fulfilling our responsibility to determine that a proposed merger produces a benefit for the public,” said Wendell F. Holland, PUC chairman. “Our quick response must be tempered by the need to provide others the opportunity to participate in the case.”

UGI and PG Energy requested that the time for consideration be abbreviated with final consideration by the commission to take place at its July 20, 2006 public meeting. During an April 6, 2006 preconference hearing, PUC Administrative Law Judge Susan D. Colwell had established a modified schedule that concludes with reply briefs on July 13, 2006. Her final decision and action by the full commission would then follow. The commission voted 5-0 to maintain the schedule established by the judge, denying the companies’ request.

First announced in January, Southern Union agreed to sell the assets of its PG Energy gas distribution division in Pennsylvania to UGI for $580 million. UGI filed with the commission in February to acquire PG Energy from Southern Union Co. Once the deal closes, Southern Union would move its headquarters from Wilkes-Barre to Houston. UGI serves 307,000 natural gas customers in 14 Pennsylvania counties, including the cities of Harrisburg, Lancaster, Reading, the Lehigh Valley and their surrounding suburbs.

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