Pennsylvania

State Profile
12,802,503
34
Utility Revenue (Millions) $2,639.70
$2,446.10
n/a
$174.20
$19.40
Consumption (Billion Cubic Feet or BCF)

Consumption by Sector In-State

25,072
1,075
236
152
241
446
Customers 2,982,410
2,735,796
241,682
4,932
Industry Infrastructure
56,524
4,813
50,961
Utility Gas Efficiency Program Funding $23,067,657.00
$3,638,450.00
$17,759,917.00
$264,600.00
$1,404,690.00

Sources

AGA Survey and Statistics System; AGA-CEE Natural Gas Efficiency Programs Survey: Utility expenditures for gas efficiency programs exclude data that have not been released by participating companies at the state level; U.S. Energy Information Administration; and U.S. Department of Transportation.

Statewide Elected Officials Next Election: 2018
Tom Wolfe (Dem.)Governor
Michael Stack (Dem.)Lieutenant Governor:
Josh Shapiro (Dem.)Attorney General
Legislature Next Election: 2018Session Dates: 1/5/2016-12/2016
Senate
Term: 4 year
President: Michael Stack (Dem.)
President Pro Tempore: Joseph Scarnati
Senate Majority Leader: Jake Corman
Senate Minority Leader: Jay Costa
Senate Member Breakdown
Democrats: 16
Republicans: 34
House of Representatives
Term: 2 year
Speaker of the House: Mike Turzai
Majority Leader: Dave Reed
Minority Leader: Frank Dermody
House of Representatives Member Breakdown
Democrats: 81
Republicans: 122
Pennsylvania Public Utility Commission Commissioners: Gubernatorial appointment, Senate confirmation: 5 year termChairperson: Appointed by and serves at the pleasure of the Governor: Indefinite terms
Current Commissioners:
Gladys Brown (D), Chairman Appointed by Governor Tom Corbett in 2013; term expires in 2018
John Coleman (R), Vice Chairman Appointed by Governor Ed Rendell in 2010; term expires in 2017
Andrew Place (D), Commissioner Appointed by Governor Tom Wolf in 2015; term expires in 2020
Robert Powelson (R), Commissioner Appointed by Governor Ed Rendell in 2008; current term expires in 2019
David Sweet (D), CommisionerAppointed by Governor Tom Wolf in 2016; term expires in 2021

Philadelphia Gas Works (PGW) offers a financing and assistance program to help spur CHP growth. Using its internal engineering staff to identify potential CHP candidates--based on basic billing data. Once a potential CHP candidate has been identified, a more detailed investment-grade assessment is performed. This assessment is initially financed by PGW. Should the project be approved, the assessment costs are rolled into the total project costs. Should the project proceed, the customer chooses contractor(s) to design and build the CHP system. PGW pays these contractors and the contractors are responsible for development and installation of the project. The customer pays PGW back via an additional change on its monthly bill. PGW requires a payback period of five years or less, which helps with program sustainability. The total cost should not exceed what the customer was already paying for natural gas and electricity. PGW recovers its total costs as well as its cost of capital, but does not earn additional profit as it is currently not a public utility. The program has traditionally been viewed as an economic tool to keep Philadelphia’s companies competitive. This will be a provision to monitor should UIL’s acquisition of PGW be approved. PGW also offers a special rate designed to incentivize CHP applications.

Governor Tom Corbett unveiled a 73-page state energy plan which he intends to have serve as a guide for business decision makers to lay out of the advantages of doing business in the state. Titled Energy=Jobs, the plan outlines several core concepts and is meant to articulate Pennsylvania’s energy policy for 2014 and beyond. It provides an overview of the state’s diverse energy portfolio, paying specific attention to the recent surge in natural gas production from the Marcellus. As well, the plan provides a synopsis of how the state utilizes its energy resources and an overview of how energy opportunities have been translated into realities. Among the plans core concepts are the following: Continuing to advance our nation’s energy independence through abundant, affordable and domestic energy; Advancing innovative technologies; Encouraging community readiness through ready-to-go community partnerships with businesses; Continuing to support electric and natural gas choice for the state’s citizens and businesses; Encouraging economic development by attracting new business investment; Encouraging energy efficiency and storage efforts that prevent energy waste; Supporting market based decisions that increase the use of naturally regenerative energy sources; and, Advancing workforce development and education to prepare Pennsylvanian’s for high quality energy-related jobs. With respect to natural gas, the plan notes that via Act 127 of 2011, the legislature authorized the Pennsylvania Public Utility Commission to oversee and enforce federal pipeline safety standards, contributing to the safe and reliable pipeline system that the state presently enjoys. As well, the plan cites Act 11, legislation which established the Distribution System Improvement Charge (DSIC) for natural gas utilities to accelerate the replacement of pipelines no longer fit for service. Of note, the plan weighs in on emerging efforts to export LNG, stating that Pennsylvania’s ports are well situated to explore and capitalize on such opportunities. The plan also promotes CNG for vehicles as a way to lower emissions.

Since 1988, all electric and natural gas utilities have been required by statue to implement low income usage reduction programs within the state of Pennsylvania. Columbia Gas of Pennsylvania, Equitable Gas, PECO, Peoples Natural Gas , Philadelphia Gas Works and all three UGI gas utilities offer energy efficiency programs.

In March of 2013, the Pennsylvania General Assembly adopted a resolution directing the Center for Rural Pennsylvania to study the potential for increased residential, commercial and industrial natural gas distribution infrastructure by the state’s public utilities to unserved and underserved areas in the state. The legislature is currently considering two bills which will foster the extension and expansion of natural gas distribution systems to un-served and under-served residential, commercial and industrial sites: SB 738, the Natural Gas Consumer Access Act, would require every natural gas distribution utility operating in PA to submit a 3-year plan to the PUC outlining the utility’s plans for extension/expansion projects; The first plan would be due by 01/01/2014, with additional plans required every two years thereafter; The PUC would have the option to reject, revise or order the utility to submit a revised plan for adequacy and completeness; The legislation would also create a system providing for expedited extension or expansion projects if an economic development agency or large number of residential, commercial or industrial entities want to obtain natural gas service. SB 739 would amend the Alternative Energy Investment Act to provide for $15 million in grants to schools, hospitals and small businesses to obtain access to natural gas service; the funding will come from existing under-utilized programs, and grants made under the legislation may provide for up to half of the cost of a project. In May of 2013, under its authority to approve Leatherstocking Gas’ (LGC) initial tariff, the Commission authorized the collection of a Construction Build-out Fee (CBF) in accord with the following conditions: LGC shall treat all CBF collections as contributions in aid of construction for accounting, ratemaking, and tax purposes; The CBF rate shall apply on a Municipality-by-Municipality basis in a manner similar to the tariff divisions employed by regulated water utilities; LGC tariff shall define a Municipality as a recognized political subdivision i.e., a township, borough, city, or village; The LGC tariff shall establish the CBF rate as separately applicable to each Municipality such that all customers within the Municipality pay a non-discriminatory identical CBF rate for an identical time; The CBF shall apply for no longer than a 10-year period (120 months) in any Municipality; The CBF shall commence and terminate upon permanently fixed dates certain (set by tariff) for each Municipality. LGC shall establish the fixed dates certain by filing a tariff supplement with the Commission concurrent with the initiation of gas delivery service within each Municipality served; The CBF shall not exceed $3/Mcf for any customer or customer class, and all customers and classes within each Municipality shall be subject to an identical CBF rate; The CBF shall appear as a separate rate for each customer class identified in the LGC tariff service classifications, and shall similarly appear as a separate line item on each customer bill. UGI proposed a Growth Extension Tariff (GET Gas) program that would allow it to spread the cost burden of new main extensions to the group of new customers connecting to a new main. The program allows for a payment surcharge over time for new customers, avoiding the significant upfront costs that often deter customers from connecting to a natural gas system. New customers would be able to use a portion of savings generated from converting to natural gas to offset the GET Gas surcharge amount. UGI will fund the program at $15 million per year for five years. This Program was approved on February 20, 2014. On April 23, 2014, the Commission voted 5-0 to investigate Columbia Gas’ proposal for a Pilot Rider New Area Service (Rider NAS). The rider would allow the costs to consumers for new natural gas service to be paid over 20 years through a monthly surcharge that would not exceed $35. Currently, consumers seeking new natural gas service from Columbia are required to pay all of the costs upfront. Columbia proposes that Rider NAS continue for a period of four years, and the company will spend no more than $1 million per year on the rider. The Commission unanimously approved this program on October 23, 2014. In July of 2014, Peoples Natural Gas, Equitable Gas and Peoples TWP submitted applications for a rider to the Pennsylvania Public Utility Commission that would allow it to add an extra charge to customers' bills in exchange for connecting them to a natural gas pipeline. The surcharge, a flat fee that would cost an average of $50 to $100 per month, would replace the current model where Peoples would charge unconnected homes thousands of dollars in upfront costs. This rider was approved on March 26, 2015. In June of 2014, the Pennsylvania House introduced HB 2393. This bill provides that no later than January 1, 2015, or 60 days after the effective date of this chapter, whichever is later, each natural gas distribution company shall file a petition with the commission proposing a pilot or permanent program, including any necessary tariffs, to extend natural gas distribution service to unserved or underserved areas within its certificated service territory. The major difference between this bill and SB 738 is that this bill mandates that these programs shall provide for on-bill financing for a term of no less than five years. A customer shall be able to pay a required customer contribution in full at any time, without incurring penalties or fees. The form of financing may include a surcharge, third-party financing or any other method of recovery approved by the commission. This bill was removed from the table on September 24, 2014. In November of 2014, UGI Utilities became the first Pennsylvania utility to connect its distribution route with the Utica Shale Wells. The direct connection runs between a Utica Shale well, two Marcellus Shale wells in northern Tioga County and a UGI pipeline. The interconnection required that the company construct a new meter and regulator station system. The system expanded the supply of natural gas available to customers in Tioga and Potter counties. This connection can run approximately 14,000 dekatherms of natural gas into UGI’s pipelines daily. In November of 2014, PECO filed an application with the Pennsylvania PUC for a pilot project to reduce the cost that customers are asked to pay to extend gas mains. PECO proposed to allow customers to finance the costs of extending gas mains over 20 years. The company stated that it can justify recalculating the payback period due to the abundance of supply from the Marcellus Shale. PECO’s application includes 3 separate proposals. The first proposal applies to all PECO firm gas customers and would change the way customer contributions in aid of construction (CIAC) are calculated for main extensions and service lines by applicants for new service. This proposal was approved on October 1, 2015. The second proposal would implement a Neighborhood Gas Pilot Program, which is designed to study to coordinated strategies to increase access to natural gas service by : (1) allowing a customer to pay its CIAC for a main extension through a fixed monthly surcharge, instead of requiring an upfront, lump-sum payment; and (2) calculating the required CIAC by taking into account the revenue, including the fixed monthly CIAC payment, expected from the applicant or applicants requesting service and from prospective customers located along the proposed main extension that that are expected to connect to the main in the future. This proposal was approved with certain modifications agreed to by settlement on October 1, 2015. The final proposal would create a Critical Facilities Pilot Program that would dedicate an annual fixed amount of PECO-funded investment to construct main extensions in PECO’s natural gas service territory in Bucks, Chester, Delaware and Montgomery Counties to allow owners of critical public facilities to install natural gas-fired emergency generation to ensure continued operation when electric service is disrupted. This proposal was withdrawn by settlement. In January of 2015, Senator Gene Yaw (R) filed SB No. 214, which provides for distribution system extension and expansion plans to increase natural gas usage in the Commonwealth. SB 214 provides, that within nine months after the effective date of this section, or within two years after a franchise territory is awarded, each natural gas distribution utility shall submit a plan to the commission. The plan shall be updated triennially unless sooner requested by the commission. Each plan shall include the following: (1) The number of existing customers by municipality in the certificated service area; (2) The number of residential, commercial and industrial entities in the service area by municipality that do not have gas service available, and the anticipated market penetration; (3) The adjacent municipalities of a distribution system that are not serviced by a natural gas distribution utility; (4) A three-year projection for extension projects, if appropriate, demonstrating a reasonable increase in the service area of customers per year; (5) A three-year projection for expansion projects, along with accompanying data, that is based upon the length and cost of the required expansions and the numbers of customers affected for each potential project demonstrating a reasonable increase in the service area of customers per year; (6) Financing that is available to complete the programs, including customer contribution programs; (7) Known rights-of-way, easement or geographic issues or local charges that present an impediment to expansion or extension projects; (8) A form that will be used to enter into an agreement with a prospective customer in order to obtain access to an expansion or extension project; (9) The standards the natural gas utility will use to determine if a customer is unable to comply with the repayment schedule adopted by the natural gas utility. On July 16, 2015, Senator Stewart Greenleaf (R) introduced Senate Bill 953, which is aimed at expanding the reach of natural gas infrastructure so more households and businesses in Pennsylvania can access natural gas as their source of energy. This legislation would direct the Public Utility Commission (PUC) to bid out designated areas throughout the Commonwealth for deployment of natural gas lines. The company that secures the bid would have a “monopoly” in that area and be required to build a natural gas line in that part so that homes, businesses and industries could connect to the line. The PUC would provide for regulation of prices, hookups and laying of pipe. On December 3, 2015, the Pennsylvania Public Utility Commission (PUC) voted unanimously to approve a settlement in Columbia Gas of Pennsylvania’s (CGP) base rate case. The approved settlement includes a host of programs designed to expand the availability of natural gas service in the state. Those programs include the following: o A footage allowance of 150 feet of main per residential applicant in normal situations; o Allowance of 150 feet of Company-owned service line in normal situations; and Up to $1,000.00 reimbursement per residential conversion customer toward the cost of house piping for projects that generate a net positive present value greater than $1,000.00 per customer. In its December 2015 rate filing, UGI Utilities proposed a Technology and Economic Development Rider (TED). The TED Rider is a negotiated rider available in the entire territory to Customers served by the Company which the Company determines, in its sole discretion, has prospective additional gas usage applicable to service under Tariff Rate Schedules N, NT, DS or LFD at the time of execution or renewal of a Service Agreement. The Rider TED is established for the purpose of adjusting the customer’s overall distribution charge to address project specific or competitive issues to gain access to and expand use of natural gas within the Commonwealth of Pennsylvania. The negotiated Rider TED may be either a surcharge or credit depending on project specific customer and Company economic requirements, such that the overall economics must meet the requirements of Section 5.1 of UGI’s tariff. Rider TED will be utilized to support the expansion of new technologies such as combined heat and power and natural gas vehicles, develop brownfields, and support economic development in Pennsylvania by facilitating business retention and attraction as well as other gas distribution system expansion activities. This proposal was approved on September 1, 2016. On April 4, 2016, Representative Robert Godshall (R) introduced HB 1946. This bill would allow natural gas distribution companies to recover the cost of constructing new facilities used for the expansion of natural gas service to unserved or underserved areas in Pennsylvania through a Distribution System Improvement Charge (DSIC). Under current law, a DSIC can only be used by a utility to recover the cost to repair, improve or replace existing distribution infrastructure. This bill is presently pending. On March 18, 2016, Columbia Gas of Pennsylvania filed a base rate case with the Pennsylvania Public Utility Commission. The filing outlines a program in which the deposit required to extend a main line to serve customers using more than 64,400 therms per year may be financed through an increase to the customer charge for the individual customer. Terms and payment period will be negotiated on a case by case basis. The customer must either pay 30% of the uneconomic portion of the deposit up front, or agree to a payment period of 10 years or less. This proposal was approved on October 27, 2016.

In February 2012, the Pennsylvania General Assembly passed HB 1244, legislation that amended Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes to provide an additional mechanism for distribution systems (gas, electric, water, wastewater) to recover costs related to the repair, improvement and replacement of eligible property. Under the amended law, the PA PUC may approve the establishment of a distribution system improvement charge (DSIC) to provide for the timely recovery of reasonable and prudent costs incurred by a utility to repair, improve or replace eligible infrastructure. On March 14, 2013, The Pennsylvania Public Utility Commission approved the Distribution System Improvement Charge (DSIC) of Columbia Gas of Pennsylvania. On April 4, 2013, The Pennsylvania Public Utility Commission approved the DSIC of Philadelphia Gas Works. PGW also received approval of its long-term infrastructure improvement plans (LTIIP) to accelerate its replacement of 8 inch and smaller cast iron main inventory (totaling 1,200 miles) by 17 years, and accelerating the replacement of all 12 inch and 30 inch high pressure cast iron main by more than 60 years. Without the LTIIP, PGW removed 18 miles of cast iron main as part of its baseline main replacement program. The approved LTIIP allows PGW to remove cast iron main from inventory at a rate of approximately 25 miles per year. On May 9, 2013, The Pennsylvania Public Utility Commission approved the DSIC plan of PECO. PECO will modernize all of the cast iron and bare steel mains in its gas system within approximately 34 years. This represents a significant acceleration over the 85-year replacement plan that existed prior to acceleration. All bare steel services will be modernized within 10 years versus the 22 year replacement period that existed prior to acceleration. On May 23, 2013, The Pennsylvania Public Utility Commission approved the DSIC plans of Peoples Natural Gas and Peoples TWP. Beginning in 2012, Peoples TWP commenced its SMP program to replace all of its unprotected bare steel and some cathodically-protected steel gas mains – a total of roughly 948 miles of pipeline – over a twenty year period, the early years of which have been described and incorporated in PTWP’s LTIIP addressed in the Commission’s order approving its DSIC and LTIIP. Beginning in 2011, Peoples commenced its SMP program to replace all of its cast iron, unprotected bare steel, and some cathodically-protected steel gas mains – a total of roughly 2,300 miles of pipeline – over a twenty year period, the early years of which have been described and incorporated in Peoples’ LTIIP addressed in the Commission’s order approving its DSIC and LTIIP. On July 16, 2013, The Pennsylvania Public Utility Commission approved the DSIC plan of Equitable Gas Co. At the time of the approval of its DSIC and LTIIP, Equitable operated approximately 41 miles of cast iron distribution mainlines. In 2012, Equitable began to accelerate the replacement of small diameter cast iron. The Commission’s order approving its DSIC and LTIIP will allow for the removal of all such pipe from Equitable’s distribution system by 2017. During the same time period, Equitable intends to accelerate the replacement of larger diameter cast iron distribution mainline. This LTIIP will allow Equitable to replace all small diameter (<12 in.) cast iron distribution mains (9.8 miles), 11.4 miles of large diameter (>12 in.) cast iron distribution mains, 49.7 miles of bare steel and wrought iron distribution mains and 28.7 miles of bare steel and wrought iron gathering mains through calendar year 2017. On December 12, 2013, UGI Central Penn Gas filed for approval of a DSIC and DSIC Tariff. On December 12, 2013, UGI Penn Natural Gas filed for approval of a DSIC and DSIC Tariff. UGI-PNG plans to retire or replace all in-service cast iron mains over the period of 14 years and all bare steel mains over the period of 30 years beginning in March 2013. On July 9, 2014, The Pennsylvania Public Utility Commission approved UGI Utilities Inc.'s $256 million long-term infrastructure improvement plan. UGI's five-year plan puts the utility on track to replace its cast-iron mains within 14 years and its bare-steel mains within 30 years of March 2013. As of 2013, UGI had roughly 2,118 miles of steel and 316 miles of iron distribution main, along with 603 miles of steel service lines. UGI also plans to replace gas service lines in conjunction with the mains to which they are connected, the PUC noted in a news release. On September 11, 2014, the Pennsylvania Public Utility Commission (PUC) approved the long-term infrastructure improvement plans, or LTIIP, of UGI Penn Natural Gas Inc. (UGI-PNG) and UGI Central Penn Gas Inc. (UGI-CPG). In its order, the PUC also approved the companies' plans to implement the distribution system improvement charges, or DSIC. Under the LTIIP, each of the UGI Corp. subsidiaries are allowed to replace an average of 17 miles of pipeline per year in a five-year period. UGI-PNG plans to spend nearly $23 million per year, while UGI-CPG plans to spend almost $14 million per year, on pipeline replacements, service line improvements and safety device installations over the five-year period. In February of 2015, PECO filed a request with the Pennsylvania Public Utility Commission (PUC) for approval to accelerate the modernization of the company’s natural gas distribution system. PECO’s plan would increase the company’s Long-Term Infrastructure Improvement Plan from $34 million per year to $61 million per year. Under the proposed plan, replacement of natural gas main would increase from about 30 miles per year to more than 50 miles per year by 2018. Bare steel service line replacement would remain at about 4,000 lines per year. This would accelerate the replacement of existing cast iron, bare steel, wrought iron and ductile iron gas main and bare steel service line from 34 years to 22 years. This plan was approved on May 7, 2015. On July 8, 2015 the Pennsylvania Public Utility Commission (PUC) issued orders finalizing previously approved distribution system improvement charge (DSIC) mechanisms for UGI Penn Natural Gas (UGI-PNG) Gas and UGI Central Penn Gas (UGI-CGP). This decision relates back to the PUC’s September 2014 orders approving Long Term Infrastructure Improvement Plans (LTIIPs) and related DSICs for UGI-PNG and UGI-CPG, subject to subsequent review of certain issues. Pursuant to a 2012 settlement resolving an investigation into a gas pipeline explosion in Allentown, the companies were not permitted to implement adjustments under the DSIC until April 2015. Under its approved LTIIP, UGI-PNG is to expend roughly $23 million annually on pipeline replacements (average of 17 miles per year), service line improvements, and safety device installations over the five-year term of the plan. Additionally, UGI-CPG, the company is to expend roughly $14 million annually on pipeline replacements (average of 17 miles per year), service line improvements, and safety device installations over the five-year term of its plan. On September 3, 2015, the Pennsylvania Public Utility Commission voted 5-0 to approve PECO Energy Co.'s plan to implement a distribution system improvement charge for its gas operations. On January 28, 2016, the Pennsylvania Public Utility Commission (PUC) voted to help Philadelphia Gas Works (PGW) fund faster pipeline replacement work. The commissioners unanimously approved an increase to the utility's distribution system improvement charge, or DSIC, raising the cap from 5% of the company's billed revenues to 7.5%. PGW will have to track and account for all its distribution system improvement charge, or DSIC, spending using a designated accounting mechanism, earmarking all unspent DSIC money for future infrastructure spending or refunds to customers, if necessary, according to the PUC decision. This increase would allow PGW to spend about $33 million annually on its main replacement program, which would cut the projected timeline to replace the company’s aging gas mains to 48 years. On March 10, 2016, the Pennsylvania Public Utility Commission issued an order approving Peoples Natural Gas’ (Peoples) Second Revised Long Term Infrastructure Improvement Plan. The newly-approved plan will allow Peoples to implement the following changes: o Shift its replacement focus towards urban projects in order to more effectively target pipeline replacements for higher risk projects located in the higher population areas of its system; o Deploy automated meter reading technology; o Undertake various upgrades and improvements to M&R stations and related M&R equipment; o Expand the replacement of bare steel and other at-risk customer-owned service lines. In addition, Peoples received approval to establish a Construction Division with in-house employees and construction crews that would perform 100% of capital related construction work at Peoples, the Equitable Division and its sister company – Peoples TWP, LLC. The Construction Division’s scope of work will include design, planning, construction, and restoration. Peoples maintains that the move to an in-house staffed Construction Division will further improve the quality of capital work by reducing the cycle time of “planning to restoration” and improving the efficiency and operating costs of all construction activities. The transition to a full Construction Division is expected to be a two-year process that will continue through 2016. By the end of 2016, the Construction Division will be staffed with superintendents, managers, supervisors, technicians and engineers, as well as approximately 300 field employees that will be located throughout the company’s service territories to handle all construction and restoration work. Approximately 220 of these field employees (including field inspectors) will be assigned to 45 construction crews, and the remaining field employees (approximately 80) will be responsible for restoration work. While the Construction Division employees will be dedicated to performing capital work, they will be made available, on a limited basis, to support Operations and Maintenance (O&M) work activities, such as emergencies and overtime call outs, in order to ensure that all operations activities are done in the most cost-efficient manner. Should this occur, their time would be properly tracked and charged as an O&M expense. On March 18, 2016 Columbia Gas of Pennsylvania (CGP) filed with the Pennsylvania Public Utility Commission (PUC) for gas distribution base rate increase. CGP indicated that the rate increase is intended to allow the company to collect the revenue requirement associated with investments made under the company's accelerated pipeline replacement program. The company expended $152 million on infrastructure investments in 2015, and estimates that is will spend $162 million on infrastructure modernization in 2016. Over the years 2016 through 2020, Columbia estimates its total capital spending will be $958 million. The filing also reflects increases in operation and maintenance expenses associated with the facilities upgrades. A final PUC decision is expected in December 2016. On June 30, 2016, The Pennsylvania Public Utility Commission (PUC) approved the modified long-term infrastructure improvement plans (LTIIPs) for Peoples Natural Gas, UGI Utilities Inc. - Gas, UGI Penn Natural Gas Inc. and Central Penn Gas Inc. The approved, revised LTIIP for Peoples Natural Gas replaces the currently approved, separate LTIIPs of the Peoples Division and the Equitable Division (previously Equitable Gas Company) of the Peoples Natural Gas Co. Peoples’ Revised LTIIP is a five-year plan that builds off of, and expands upon, the previously-approved LTIIPs for the Peoples and Equitable Divisions. Peoples has replaced all known cast iron pipelines in its system, and plans to address accelerated replacement of the 37 miles of known cast iron pipelines acquired through its formation of the Equitable Division. Peoples proposes to replace all bare steel and cast iron pipelines over an approximately 20-year period. In its revised LTIIP, Peoples indicates it will replace all at-risk customer-owned service lines, which is an update from its original LTIIP where the company said it planned to pressure test customer-owned service lines prior to replacement. Peoples provides natural gas service to approximately 640,000 residential, commercial, and industrial customers in all or portions of 17 Southwestern Pennsylvania Counties. In a separate action, the Commission voted to approve the modified LTIIPs for UGI Gas, UGI Penn Natural Gas and UGI Central Penn Gas. Each of the UGI Companies’ modified LTIIPs are five-year plans, spanning the years 2014-2018. The LTIIPs detail accelerated infrastructure improvements that are intended to enhance system resiliency. The instant petitions do not propose to change or extend the term of the current LTIIPs. Rather, the instant petitions propose to increase the amount of infrastructure spending over that of the currently effective LTIIPs by more than 20 percent. The UGI Companies as a group propose spending more than 50 percent additional capital in the final three years of their LTIIPs compared to the original projections.

In February 2012, the Pennsylvania General Assembly passed HB 1244, legislation that amended Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes to provide an additional mechanism for distribution systems (gas, electric, water, wastewater) to recover costs related to the repair, improvement and replacement of eligible property. Under the amended law, the PA PUC may approve the establishment of a distribution system improvement charge (DSIC) to provide for the timely recovery of reasonable and prudent costs incurred by a utility to repair, improve or replace eligible infrastructure. On March 14, 2013, The Pennsylvania Public Utility Commission approved the Distribution System Improvement Charge (DSIC) of Columbia Gas of Pennsylvania. On April 4, 2013, The Pennsylvania Public Utility Commission approved the DSIC of Philadelphia Gas Works. PGW also received approval of its long-term infrastructure improvement plans (LTIIP) to accelerate its replacement of 8 inch and smaller cast iron main inventory (totaling 1,200 miles) by 17 years, and accelerating the replacement of all 12 inch and 30 inch high pressure cast iron main by more than 60 years. Without the LTIIP, PGW removed 18 miles of cast iron main as part of its baseline main replacement program. The approved LTIIP allows PGW to remove cast iron main from inventory at a rate of approximately 25 miles per year. On May 9, 2013, The Pennsylvania Public Utility Commission approved the DSIC plan of PECO. PECO will modernize all of the cast iron and bare steel mains in its gas system within approximately 34 years. This represents a significant acceleration over the 85-year replacement plan that existed prior to acceleration. All bare steel services will be modernized within 10 years versus the 22 year replacement period that existed prior to acceleration. On May 23, 2013, The Pennsylvania Public Utility Commission approved the DSIC plans of Peoples Natural Gas and Peoples TWP. Beginning in 2012, Peoples TWP commenced its SMP program to replace all of its unprotected bare steel and some cathodically-protected steel gas mains – a total of roughly 948 miles of pipeline – over a twenty year period, the early years of which have been described and incorporated in PTWP’s LTIIP addressed in the Commission’s order approving its DSIC and LTIIP. Beginning in 2011, Peoples commenced its SMP program to replace all of its cast iron, unprotected bare steel, and some cathodically-protected steel gas mains – a total of roughly 2,300 miles of pipeline – over a twenty year period, the early years of which have been described and incorporated in Peoples’ LTIIP addressed in the Commission’s order approving its DSIC and LTIIP. On July 16, 2013, The Pennsylvania Public Utility Commission approved the DSIC plan of Equitable Gas Co. At the time of the approval of its DSIC and LTIIP, Equitable operated approximately 41 miles of cast iron distribution mainlines. In 2012, Equitable began to accelerate the replacement of small diameter cast iron. The Commission’s order approving its DSIC and LTIIP will allow for the removal of all such pipe from Equitable’s distribution system by 2017. During the same time period, Equitable intends to accelerate the replacement of larger diameter cast iron distribution mainline. This LTIIP will allow Equitable to replace all small diameter (<12 in.) cast iron distribution mains (9.8 miles), 11.4 miles of large diameter (>12 in.) cast iron distribution mains, 49.7 miles of bare steel and wrought iron distribution mains and 28.7 miles of bare steel and wrought iron gathering mains through calendar year 2017. On December 12, 2013, UGI Central Penn Gas filed for approval of a DSIC and DSIC Tariff. On December 12, 2013, UGI Penn Natural Gas filed for approval of a DSIC and DSIC Tariff. UGI-PNG plans to retire or replace all in-service cast iron mains over the period of 14 years and all bare steel mains over the period of 30 years beginning in March 2013. On July 9, 2014, The Pennsylvania Public Utility Commission approved UGI Utilities Inc.'s $256 million long-term infrastructure improvement plan. UGI's five-year plan puts the utility on track to replace its cast-iron mains within 14 years and its bare-steel mains within 30 years of March 2013. As of 2013, UGI had roughly 2,118 miles of steel and 316 miles of iron distribution main, along with 603 miles of steel service lines. UGI also plans to replace gas service lines in conjunction with the mains to which they are connected, the PUC noted in a news release. On September 11, 2014, the Pennsylvania Public Utility Commission (PUC) approved the long-term infrastructure improvement plans, or LTIIP, of UGI Penn Natural Gas Inc. (UGI-PNG) and UGI Central Penn Gas Inc. (UGI-CPG). In its order, the PUC also approved the companies' plans to implement the distribution system improvement charges, or DSIC. Under the LTIIP, each of the UGI Corp. subsidiaries are allowed to replace an average of 17 miles of pipeline per year in a five-year period. UGI-PNG plans to spend nearly $23 million per year, while UGI-CPG plans to spend almost $14 million per year, on pipeline replacements, service line improvements and safety device installations over the five-year period. In February of 2015, PECO filed a request with the Pennsylvania Public Utility Commission (PUC) for approval to accelerate the modernization of the company’s natural gas distribution system. PECO’s plan would increase the company’s Long-Term Infrastructure Improvement Plan from $34 million per year to $61 million per year. Under the proposed plan, replacement of natural gas main would increase from about 30 miles per year to more than 50 miles per year by 2018. Bare steel service line replacement would remain at about 4,000 lines per year. This would accelerate the replacement of existing cast iron, bare steel, wrought iron and ductile iron gas main and bare steel service line from 34 years to 22 years. This plan was approved on May 7, 2015. On July 8, 2015 the Pennsylvania Public Utility Commission (PUC) issued orders finalizing previously approved distribution system improvement charge (DSIC) mechanisms for UGI Penn Natural Gas (UGI-PNG) Gas and UGI Central Penn Gas (UGI-CGP). This decision relates back to the PUC’s September 2014 orders approving Long Term Infrastructure Improvement Plans (LTIIPs) and related DSICs for UGI-PNG and UGI-CPG, subject to subsequent review of certain issues. Pursuant to a 2012 settlement resolving an investigation into a gas pipeline explosion in Allentown, the companies were not permitted to implement adjustments under the DSIC until April 2015. Under its approved LTIIP, UGI-PNG is to expend roughly $23 million annually on pipeline replacements (average of 17 miles per year), service line improvements, and safety device installations over the five-year term of the plan. Additionally, UGI-CPG, the company is to expend roughly $14 million annually on pipeline replacements (average of 17 miles per year), service line improvements, and safety device installations over the five-year term of its plan. On September 3, 2015, the Pennsylvania Public Utility Commission voted 5-0 to approve PECO Energy Co.'s plan to implement a distribution system improvement charge for its gas operations. On January 28, 2016, the Pennsylvania Public Utility Commission (PUC) voted to help Philadelphia Gas Works (PGW) fund faster pipeline replacement work. The commissioners unanimously approved an increase to the utility's distribution system improvement charge, or DSIC, raising the cap from 5% of the company's billed revenues to 7.5%. PGW will have to track and account for all its distribution system improvement charge, or DSIC, spending using a designated accounting mechanism, earmarking all unspent DSIC money for future infrastructure spending or refunds to customers, if necessary, according to the PUC decision. This increase would allow PGW to spend about $33 million annually on its main replacement program, which would cut the projected timeline to replace the company’s aging gas mains to 48 years. On March 10, 2016, the Pennsylvania Public Utility Commission issued an order approving Peoples Natural Gas’ (Peoples) Second Revised Long Term Infrastructure Improvement Plan. The newly-approved plan will allow Peoples to implement the following changes: o Shift its replacement focus towards urban projects in order to more effectively target pipeline replacements for higher risk projects located in the higher population areas of its system; o Deploy automated meter reading technology; o Undertake various upgrades and improvements to M&R stations and related M&R equipment; o Expand the replacement of bare steel and other at-risk customer-owned service lines. In addition, Peoples received approval to establish a Construction Division with in-house employees and construction crews that would perform 100% of capital related construction work at Peoples, the Equitable Division and its sister company – Peoples TWP, LLC. The Construction Division’s scope of work will include design, planning, construction, and restoration. Peoples maintains that the move to an in-house staffed Construction Division will further improve the quality of capital work by reducing the cycle time of “planning to restoration” and improving the efficiency and operating costs of all construction activities. The transition to a full Construction Division is expected to be a two-year process that will continue through 2016. By the end of 2016, the Construction Division will be staffed with superintendents, managers, supervisors, technicians and engineers, as well as approximately 300 field employees that will be located throughout the company’s service territories to handle all construction and restoration work. Approximately 220 of these field employees (including field inspectors) will be assigned to 45 construction crews, and the remaining field employees (approximately 80) will be responsible for restoration work. While the Construction Division employees will be dedicated to performing capital work, they will be made available, on a limited basis, to support Operations and Maintenance (O&M) work activities, such as emergencies and overtime call outs, in order to ensure that all operations activities are done in the most cost-efficient manner. Should this occur, their time would be properly tracked and charged as an O&M expense. On March 18, 2016 Columbia Gas of Pennsylvania (CGP) filed with the Pennsylvania Public Utility Commission (PUC) for gas distribution base rate increase. CGP indicated that the rate increase is intended to allow the company to collect the revenue requirement associated with investments made under the company's accelerated pipeline replacement program. The company expended $152 million on infrastructure investments in 2015, and estimates that is will spend $162 million on infrastructure modernization in 2016. Over the years 2016 through 2020, Columbia estimates its total capital spending will be $958 million. The filing also reflects increases in operation and maintenance expenses associated with the facilities upgrades. A settlement modifying the company’s proposal was approved on October 27, 2016. On June 30, 2016, The Pennsylvania Public Utility Commission (PUC) approved the modified long-term infrastructure improvement plans (LTIIPs) for Peoples Natural Gas, UGI Utilities Inc. - Gas, UGI Penn Natural Gas Inc. and Central Penn Gas Inc. The approved, revised LTIIP for Peoples Natural Gas replaces the currently approved, separate LTIIPs of the Peoples Division and the Equitable Division (previously Equitable Gas Company) of the Peoples Natural Gas Co. Peoples’ Revised LTIIP is a five-year plan that builds off of, and expands upon, the previously-approved LTIIPs for the Peoples and Equitable Divisions. Peoples has replaced all known cast iron pipelines in its system, and plans to address accelerated replacement of the 37 miles of known cast iron pipelines acquired through its formation of the Equitable Division. Peoples proposes to replace all bare steel and cast iron pipelines over an approximately 20-year period. In its revised LTIIP, Peoples indicates it will replace all at-risk customer-owned service lines, which is an update from its original LTIIP where the company said it planned to pressure test customer-owned service lines prior to replacement. Peoples provides natural gas service to approximately 640,000 residential, commercial, and industrial customers in all or portions of 17 Southwestern Pennsylvania Counties. In a separate action, the Commission voted to approve the modified LTIIPs for UGI Gas, UGI Penn Natural Gas and UGI Central Penn Gas. Each of the UGI Companies’ modified LTIIPs are five-year plans, spanning the years 2014-2018. The LTIIPs detail accelerated infrastructure improvements that are intended to enhance system resiliency. The instant petitions do not propose to change or extend the term of the current LTIIPs. Rather, the instant petitions propose to increase the amount of infrastructure spending over that of the currently effective LTIIPs by more than 20 percent. The UGI Companies as a group propose spending more than 50 percent additional capital in the final three years of their LTIIPs compared to the original projections.

PGW received approval of a weather normalization adjustment clause in 2002. A pilot weather normalization adjustment is in place for the residential customers of Columbia Gas of Pennsylvania. The Pennsylvania Public Utility Commission (PUC) will hold an en banc hearing on Thursday, March 3, 2016, at 9:00 a.m. to seek information from experts regarding the efficacy and appropriateness of alternative ratemaking methodologies, such as revenue decoupling, that remove disincentives that might presently exist for energy utilities to pursue aggressive energy conservation and efficiency initiatives. The purpose of this hearing is to permit participants to inform the Commission on the following rate issues: (1) whether revenue decoupling or other similar rate mechanisms encourage energy utilities to better implement energy efficiency and conservation programs; (2) whether such rate mechanisms are just and reasonable and in the public interest; and (3) whether the benefits of implementing such rate mechanisms outweigh any costs associated with implementing the rate mechanisms.