PECO Energy hikes gas distribution prices 31%

PECO Energy Co., Philadelphia, will increase natural gas rates by 31%, under a deal reached Tuesday with the state Public Utility Commission staff. The full commission is expected to approve the rate increase in the next few days, the company says. Under the staff-approved increase, gas will rise to 90.6� /hundred cu ft from 68�/hundred cu ft based on the increase in commodity prices.


PECO Energy Co., Philadelphia, will increase natural gas rates by 31%, under a deal reached Tuesday with the state Public Utility Commission staff.

The full commission is expected to approve the rate increase in the next few days, the company says. Under the staff-approved increase, gas will rise to 90.6� /hundred cu ft from 68�/hundred cu ft based on the increase in commodity prices.

The 90.6� include 59� for natural gas and pipeline transportation and 31.6� for delivery charges, says Michael Wood, a PECO Energy spokesman.

The price will remain in effect until December 2001. Each year PECO Energy files for a �purchased gas adjustment� to pass through to consumers any changes in the costs of the commodity. PECO uses a mixed portfolio, consisting mostly of long-term gas contracts indexed to fluctuations in gas costs, says Wood.

The company has little incentive to hedge against the volatility or fluctuations in price because the commission does not allow the utility to benefit from any gains from the hedge or pass on any losses to consumers.

Gas prices have dramatically increased this year compared to 1999, in part, because of steadily increasing demand but mostly because natural gas supply has not kept pace with the growth in demand. The producing sector is trying to ramp up exploration and production after cutting back for several years when prices averaged below $2/Mcf. Prices are hovering in the $6/Mcf range and projected to stay well above $4 for months to come.

PECO uses the rate hike is to recover undercollected costs of gas purchased on the wholesale market last year. It also reflects expectations of what costs will be for the next year.

Because of the sharp increase in prices, PECO Energy suggests that consumers keep their thermostats between 65�F and 70�F�in advice reminiscent of President Jimmy Carter's conservation message.

More in Home