The latest reduction would take effect Dec. 1. Prices have dropped 40 percent in the past four years.
A worker walks through pipes connecting storage tanks and pumps in the hydraulic fracturing process, which releases natural gas from the Marcellus Shale layer, under way at a Range Resources site in Claysville, Pa. Natural gas provider UGI Utilities Inc. is proposing a 3.4 percent drop in prices to take effect later this year, citing in part increased production from Marcellus Shale.Effective Dec. 1, the bill for a typical customer who uses about 8,500 cubic feet of natural gas per month would fall from $89.60 to $86.58 a month.
A separate division that serves the Slate Belt and part of Lehigh County — UGI Central Penn Gas — is proposing a 3.5 percent drop. That results in a decrease from $94.17 to $90.91 for a typical customer.
UGI's annual proposals will be filed with the state Public Utility Commission on June 1 to take effect six months later.
The proposed reductions are the latest in a string of decreases reflecting declining wholesale prices. UGI natural gas prices are 40 percent less than four years ago, the Reading-based company said.
“An abundant supply of natural gas is allowing us to continue to pass these savings on to our customers,” Vicki Ebner, UGI senior vice president of customer and government relations, said in a statement today. “Thanks in part to Marcellus Shale, natural gas prices are at historic lows.”Ebner was referring to natural gas reserves found in rock formations that span large parts of Pennsylvania and neighboring states.
Natural gas is released through a process known as hydraulic fracturing, or fracking, where drilling companies inject water, chemicals and sand into the rock at high pressure. Environmentalists say the process needs stricter oversight, noting potential harmful effects such as contaminated drinking water.
Aside from Marcellus Shale, UGI spokesman Joseph Swope said the mild winter helped keep consumption down.
"You have a tremendous amount of production and it's outstripping demand at this point," Swope said.Investors are betting on falling prices. Natural gas futures are trading at about $2.62 per 1,000 cubic feet, down 12.4 percent since Jan. 1.
The utility's annual rates can be adjusted quarterly if there are significant changes to the market.
Pennsylvania utilities by law are not permitted to profit on changes to wholesale rates. Increases or decreases are passed along to customers without markup. Utilities profit on the distribution of natural gas.