Will PA Raise Gas Prices for Everyone Else Now Too?

Yet another story from the Pennsylvania front, as Andrew Maykuth reports for Philly.com:

Should current Pennsylvania utility customers pay the cost to extend gas service to their neighbors?

The state House Consumer Affairs Committee on Wednesday ventured into that minefield of potentially clashing interests when it heard testimony in Harrisburg on a proposal to allow utilities to impose a surcharge on all customers to pay to extend gas mains. Under current rules, only the customers who benefit from the new gas service pay the costs.

Read more on that story here.

Utilities say demand for new gas service has grown because of Pennsylvania’s shale-gas boom, but they have been unable to satisfy that demand because the upfront cost for customers to build new mains is so high. New gas mains cost between $500,000 and $1 million a mile to build.

Under Public Utility Commission regulations, utilities in the state typically can’t raise rates to pay for projects that benefit a few customers unless there is a larger public benefit.

When a new gas main is requested, utilities must apply an economic test in which the costs of the project are measured against expected revenue. If gas-main extension fails that economic test, those who want the service are obliged to pay any “uneconomic” costs.

Theses costs are often just as uneconomic for the new customers. Read more here.

When prospective gas customers include the cost of adding lines inside their houses and new appliances, many decide the cost of a new main is too high.

Read the full Philly.com article here.

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