PGW wants an 11% rate hike as gas consumption falls

State regulators decided Thursday to conduct a full review of a Philadelphia Gas Works proposal to increase customer rates by $70 million, which would boost the monthly bill for a typical residential customer by 11.2%, from $99.52 to $110.68.

The Pennsylvania Public Utility Commission, meeting in a teleconference because of the coronavirus lockdown, voted unanimously to investigate PGW’s rate increase proposal filed on Feb. 28. In contested rate increases, the regulatory agency typically conducts a full review, which will delay a final decision until November.

The city-owned gas utility said it needs to increase rates to pay for an accelerated gas-main replacement program to update aging infrastructure. PGW also said it needs higher rates to make up for customers using less gas thanks to more efficient appliances and warmer weather.

PGW serves 500,000 customers, mostly residential. The last time the utility got a rate increase was in 2017, when the PUC granted a 6.3% boost to monthly bills.

The current rate request seeks to increase the fixed residential customer charge from $13.75 per month to $19.25 per month, or by 40%. Utilities have been increasingly trying to boost fixed fees to generate revenue, because customers pay the fee no matter how little gas they consume, making it immune to fluctuations in weather and consumption.

The delivery charge would increase from 66.967 cents per hundred cubic feet (ccf) of gas to 73.893 cents, or 10.3%. A typical residential customer uses about 750 ccf of gas a year.

The Pennsylvania Office of Consumer Advocate on March 10 filed objections to the rate request, saying it “will or may result in unjust and unreasonable rates” and asked the PUC for the review. The state’s Small Business Advocate also filed objections.

The PUC conducted its regular meeting by teleconference, with a public listen-only dial-in, to comply with Gov. Tom Wolf’s order to maintain social distancing during the coronavirus pandemic.