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First Posted: 2/28/2014 UGI Penn Natural Gas customers will pay more for natural gas today as the utility passes on its cost to purchase the commodity.
Record low temperatures in Northeastern Pennsylvania this winter have increased demand for the fuel used for heating &#8212; and wholesale prices have risen, as well.
But due to the proximity of the Marcellus Shale and UGI&#8217;s purchase last year of natural gas at low prices, the hike will be just more than 3 percent for the average residential customer. Their monthly heating bill will increase to $94.17 from $91.33, according to the utility.
&#8220;We are pleased that we have been able to keep the price of natural gas stable for our customers, even with January temperatures nearly 18 percent colder than normal,&#8221; Paul Szykman, UGI Utilities vice president of rates, said Friday in a prepared statement. &#8220;While UGI gas costs are stable, we understand that customers may see higher monthly bills because of increased usage.&#8221;
The utility buys natural gas on a 12-month basis, said Joe Swope, UGI spokesman. Over the summer and fall months, UGI bought significant amounts of natural gas when the prices were lower.
The utility does mark up the price it pays for the gas and its transportation. That cost is passed on to customers, Swope explained.
UGI has been paying less to transport the natural gas from the Marcellus Shale field located in the northern tier counties of the state as opposed to moving it through pipelines from sources farther away. It&#8217;s the difference between transporting it 28 miles from Mehoopany in Wyoming County and 2,000 miles from the Gulf Coast, Swope said.
&#8220;One of the significant benefits of the Marcellus Shale is it&#8217;s not only local and plentiful, it also what I like to call &#8216;hurricane-proof,&#8217;&#8221; Swope said. The locally produced natural gas is a more stable source and not vulnerable to price spikes caused by weather-related shut downs in the Gulf Coast, he said.
UGI PNG has more than 162,000 customers in 13 counties and serves the Scranton, Wilkes-Barre and Williamsport markets. It is the only one of UGI&#8217;s three natural gas branches to see an increase. GI Gas Division and UGI Central Penn Gas rates will remain the same.
The new Purchased Gas Cost rate for UGI PNG will be approximately $5.20 per thousand cubic feet, a standard measure of usage. The utility last increased its PCG rate on June 1, 2013, to $5.54 per mcf. It dropped to $4.89 per mcf on Dec. 1.
The rate had been dropping since March 1, 2009, when it was at $10.39 per mcf. A year ago the rate was $5.11 per mcf.
Swope estimated that over a year the average residential customer uses between eight to 10 mcf per month.

UGI PNG announces natural gas rate hike