Jan. 29--UGI Penn Natural Gas wants to increase rates for natural gas service that could result in double-digit increases in customers' gas bills.

The area's dominant natural gas utility is requesting increases in base rates that would net the company an additional $38.1 million annually from customers.

The move to hike rates for an essential service comes at a bad time for consumers as unemployment climbs and the nation plunges deeper into a recession.

UGI's proposal would hike the monthly customer charge 53 percent from the current $11.75 per month to $18.

The distribution rate would increase by about a fifth, and tiered charges would be merged to one rate. Distribution rates are currently 3 cents for each of the first eight mcf, or thousand cubic feet, of gas, and 2.8 cents for use over that. Under UGI's proposed rate, the distribution charged would go to one rate of 3.6 cents per mcf.

The customer and distribution charges pay for utilities' operations and profits. The largest portion of the bill, the commodity rate, covers the cost of the gas itself. A pass-through expense, the utility does not make money from the commodity rate, which is changed to reflect market prices four times a year, wth the next adjustment coming March 1.

The company also proposes eliminating tiers as a way to promote conservation. By offering lower rates for increased usage, Mr. Swope said the utility was sending the wrong message.

The utility is being stung by the economy in its own way, said UGI spokesman Joe Swope. In recent years, the company had been able to defray costs through growth. With the collapse of home construction, conservation from homeowners and less demand from industry, the utility is having a tough time making ends meet.

"Natural gas delivery is capital intensive, and the growth is not there to finance what we have to do without increasing base rates," he said. The company said the increase will also help fund assistance to low-income customers and conservation programs.

UGI's statement sets March 29 as the date to impose the new rates, but it is unlikely it will happen then. When confronted with base rate increase requests, the Public Utilities Commission typically votes to open a formal investigation that includes testimony from the utility and interested parties, as well as public comment. The process takes about seven months.

If UGI's requests are granted in full, an average household using 10 mcf of gas per month will pay 12.7 percent more, or $17.62 additional per month, for a total bill of $155.94.

UGI last raised its base rates two years ago in December 2006, a move that netted the company $12.5 million more annually from customers. That increase included a 22 percent hike in distribution rates and a 4.5 percent hike in the customer charge.

UGI Penn Natural Gas is a unit of Valley Forge-based UGI Utilities, Inc., serving 158,000 customers in 13 counties throughout Northeast and Central Pennsylvania.

On your bill

- Customer charge

Monthly fee per customer

-Distribution charge

Rate paid to deliver gas to the customer

-Commodity charge

The cost of natural gas

Natural gas companies cover their cost of operations and earn their profit from customer and distribution charges.

The commodity charge is a pass-through expense with the customer paying what the utility pays.

For more information about the consumer's role in ratemaking, visit:

www.puc.state.pa.us/general/consumer_ed/pdf/Ratemaking_Complaints.pdf

Contact the writer: dfalchek@timesshamrock.com

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