Undercollection

Due to undercollection of costs from its customers over the past three months, Philadelphia-based PECO said Wednesday that it is increasing its overall price for natural gas service, effective by March 1, by a total of 7%, or 9.265 cents per 100 cubic feet, marking the company’s first natural gas price increase in more than a year. The Exelon subsidiary services 474,000 suburban natural gas customers in southeastern Pennsylvania. The current purchased gas cost rate will increase from 97 cents per 100 cubic feet of natural gas to $1.06 per 100 cubic feet, so the average monthly residential bill based on 10,000 cubic feet of usage will increase from roughly $131 to $141. Reed Horting, PECO vice president, Gas, said the company has undercollected from customers for its actual gas supply costs during the past three months and now must increase the rate in order to recover this deficit. He noted that unlike gasoline or oil dealers, Pennsylvania gas utilities can only adjust their regulated rates every quarter to reflect their cost of buying gas on the wholesale market. “PECO makes a particular effort to keep rates as low as possible during the winter months when it matters most to customers,” said Horting. “We purchase our supply in a variety of ways as part of a portfolio approach in an effort to keep the cost to customers as stable as possible.” The utility noted that even with the increase, PECO’s purchased gas cost rate is still almost $2.25/Mcf less than it was just a year ago when rates reflected the sharply increased wholesale prices following Hurricanes Katrina and Rita in the Gulf of Mexico. In addition, this increase follows four successive decreases of 6.5%, 8.9%, 13.4% and 4.5% in the last four quarters.