Pa. approves Peco gas-rate increase. Bills will go up 9% in Jan. 1.

The natural gas bills for more than half a million Peco customers will increase 9% on Jan. 1, according to a rate settlement approved Thursday by state regulators. The increase is separate from any change in energy costs, which have soared this year.

The Pennsylvania Public Utility Commission (PUC) unanimously approved a settlement with the Philadelphia utility that will increase a typical monthly bill for a residential customer by $8.57, or 9%, from $95.31 to $103.88. A typical residential customer uses 80 hundred cubic feet (CcF) per month.

The settlement between Peco, the PUC staff and consumer advocates scaled back Peco’s initial rate request, filed in April, which would have increased a residential bill by $12.26 per month, or 12.9%, to $107.57. The settlement was approved Oct. 11 by F. Joseph Brady, an administrative law judge who oversaw the case.

The rate settlement will increase Peco’s annual revenue by $54.8 million, or about two-thirds of the $81.2 million the company had initially requested. It was Peco’s second gas-rate increase in two years. Under terms of the settlement, Peco agreed to not file for another gas distribution base rate increase before March 15, 2024.

The rate increase applies only to the charge Peco assesses for delivering energy, which is listed on its bill as a gas delivery charge.

The actual cost for energy, the gas supply charges, are subject to regular adjustments to reflect the rise and fall of commodity markets. According to the U.S. Energy Information Administration, U.S. retail natural gas energy prices will increase 22% this year over last winter. The energy costs are passed through to customers without a markup; Peco is allowed to earn a profit only on the distribution charge.

Peco serves about 540,000 gas customers in the suburbs in addition to 1.6 million electric customers in Philadelphia and the suburbs, whose electric rates are unaffected by the gas-rate filing.

The company said it needed higher rates to invest about $300 million a year in infrastructure, including an accelerated program to replace old cast iron and bare steel gas mains with plastic pipes. The company is on pace to replace 60 miles of gas mains this year, reducing leaks of methane, a powerful greenhouse gas.

Under the settlement, the fixed-rate portion of a monthly residential bill — the customer charge, which is assessed regardless of how much energy is consumed — will increase 62 cents, or 4.5%, from $13.63 to $14.25. Peco had requested a 36% increase in the residential charge, to $18.50.

The settlement includes an additional $650,000 per year for Peco’s Low Income Usage Reduction Program, increasing the budget to $3.15 million. Peco will also contribute $300,000 per year of shareholder funds to the company’s Matching Energy Assistance program.

The settlement was approved by 5-0 vote at the first PUC meeting in several years attended by a full panel of five commissioners after Gov. Tom Wolf and Senate Republicans in September resolved a two-year standoff that had blocked new PUC appointments.

The Pennsylvania Senate on Oct. 19 approved the reappointment of Commissioner John F. Coleman Jr. and the new appointments of Commissioners Stephen M. DeFrank and Kathryn L. Zerfuss to the PUC. The approval followed the unanimous recommendations by the Senate Consumer Protection and Professional Licensure Committee, which conducted a noncombative 22-minute confirmation hearing on Oct. 18.

The three on Thursday joined Gladys Brown Dutrieuille, the commission’s chair, and Ralph V. Yanora, the only two commissioners with unexpired terms.