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Pa. rejects Peco’s pleas to give it a bigger gas rate increase

Almost all the gas-rate increase will be borne by residential customers, who will pay $5.92 more per month, or 8.3%.

A light art display atop PECO's crown lights on Sept. 16, 2011.  (Akira Suwa / Staff Photographer )
A light art display atop PECO's crown lights on Sept. 16, 2011. (Akira Suwa / Staff Photographer )Read moreAKIRA SUWA / File photo

State regulators on Thursday affirmed a rate increase for Peco Energy natural gas customers, under which a typical residential monthly bill will increase $5.92, or 8.3%.

The Pennsylvania Public Utility Commission, on a 4-0 vote, denied a plea from Peco to reconsider its June 22 decision that provides for a $29.1 million increase in annual operating revenues. Peco last year applied for a $68.7 million increase in revenue, its first gas-rate increase in a decade.

The overall increase generates about 5% more revenue for the company, but almost all of the increase falls on residential customers, according to the elaborate formula that the state uses to allocate costs. While residential monthly bills increase 8.3%, bills for small commercial customers go up about $2.90 per month, or less than 1%.

The new rates went into effect last month following the PUC’s June decision. The full impact will be felt in the fall, when the winter heating season kicks in and monthly bills increase.

Under the new rate scheme, the fixed monthly customer charge for Peco residential customers is increasing from$11.75 to $13.63. Peco had sought an increase to $16 a month. The boost reflects a continuing a trend among public utilities to stabilize their income by shifting more revenue to fixed fees rather than the charges based on energy usage.

Unlike many utility rate increase requests, which are decided by settlements among company negotiators, consumer advocates, and PUC staff, Peco’s rate request was contested and went through full hearings and a 447-page recommended decision by the hearing examiner, Administrative Law Judge Christopher P. Pell.

Peco disagreed with the recommendation and the PUC’s decision, and asked for a reconsideration. The PUC said Peco had offered few new arguments that had not already been heard during the nine-month proceeding, and denied its request.

Despite the increase, Peco said that customers are currently paying “among the lowest prices” for natural gas in the last 15 years because of declines in natural gas supply costs and decreases in consumption due to more energy efficient appliances.