Peco gas bills skyrocket March 01, 2001 By TONY PHYRILLAS For The Times Herald

PHILADELPHIA -- If you turned up the thermostat a little back in November or December, you’re going be paying for it starting today.

After months of buying natural gas at prices higher than it was charging customers, PECO Energy Co. said Tuesday it is forced to pass along a significant rate increase for its natural gas service, effective March 1.

Homeowners can expect a 25-percent increase in their bills, which will arrive in mailboxes during the coming month.

Peco has "shielded" customers during the brunt of the winter months, but will now start recovering $128 million in "underbilling," said Peco spokesman Mike Wood.

"We can’t sugarcoat this increase," Wood said. "It’s substantial."

The only consolation for customers is that the increase comes at the tail-end of the heating season, Wood said.

It’s difficult to calculate an average increase for a customer because individual homeowners use natural gas for heating, cooking and various appliances, but a $25 to $50 increase in monthly bills would be typical. The new rate could remain in effect through November.

An increase of 23 cents per hundred cubic feet (ccf) of natural gas was filed this week by Peco with the Pennsylvania Public Utility Commission. The cost per hundred cubic feet is what Peco uses to calculate how much gas a household uses, somewhat like kilowatts are used to measure electric use.

For residential heating customers, Peco said its rate would rise to $1.14 per ccf. On average, a heating customer may use 200 ccf of natural gas per month during the winter season, November through February, while consumption drops off sharply for the other months of the year, depending on weather and the individual customer.

November and December 2000 were among the coldest on record, and even though the weather in January and February was more moderate, it has been about 11 percent colder this heating season compared to a year ago.

Peco serves 425,000 natural gas customers in Bucks, Chester, Delaware and Montgomery counties. Of those, 142,000 customers are in Montgomery County and 51,000 are in Chester County.

Wood said Peco’s predicament is not unique. Utilities are at the mercy of wholesale natural gas prices, which have skyrocketed since last spring.

Peco has been selling natural gas at below market price for the past year as wholesale prices rose to unprecedented levels, Wood said.

The company could have raised rates sooner, but with the greatest usage during the heating months and the much colder weather this winter compared to last year, Peco officials decided the impact on customers would have been too severe, Wood said.

Customers can expect to pay the higher rate for natural gas into the next winter season. The rate effective Dec. 1, 2001, will be established following a complete review of purchases plus a revised forecast of prices for the next 12 months.

Peco said it will monitor its cost recovery and if there is a significant change, either in the rate of the recovery of previous gas costs or in the current price of wholesale gas, the rate could be adjusted sooner.

Wholesale prices have already begun to decline on the futures market, but summer prices appear to be about twice what Peco would have anticipated in past years, Peco officials said.

Peco is urging customers who might have trouble paying the new increase to contact the company about arranging for a billing plan that would allow homeowners to average their payments over 12 months. Peco’s customer service number is 1-800-494-4000.

Very few of its customers take advantage of budget billing, and Peco urges customers to call early to make payment arrangements and not wait until their bill arrives.

Peco also urges low-income customers to apply for LIHEAP grants. Pennsylvania has expanded the income eligibility criteria and extended application deadlines, making more money available to eligible individuals and families. Peco customers can call 1-800-34-HELP-4 for assistance.

The rate increase does not cover Peco’s electric customers or Philadelphia consumers served by Philadelphia Gas Works.

http://www.zwire.com/site/news.cfm?newsid=1474866&BRD=1672&PAG=461&dept_id=33380&rfi=6

-- Martin Thompson (mthom1927@aol.com), March 01, 2001