Demand for Natural Gas Distribution Lines Focus of Rural PA Hearing

HARRISBURG – Delivering local natural gas to rural consumers was the focus of a public hearing held Wednesday by the Center for Rural Pennsylvania, a bipartisan, bicameral legislative agency that serves as a resource for rural policy within the Pennsylvania General Assembly, according to State Senator Gene Yaw (R-23).

Yaw, who serves as Chairman of the Center's Board of Directors, hosted the discussion along with State Representative Garth Everett (R-84), State Representative Tina Pickett (R-110) and Barry Denk, Executive Director for the Center, at the Wysox Volunteer Fire Hall in Bradford County.

"There is widespread interest in seeing locally produced natural gas used locally to benefit our area businesses and homeowners," Yaw said. "We have an abundant natural resource in our region, which can be used to help consumers lower their energy heating costs. Being able to fully utilize this commodity would mean a great deal for rural residents."

The focus of the hearing was to discuss the advantages and challenges of providing natural gas service to those who are currently unable to obtain and use this fuel type in rural areas.

"Utility companies are reporting that in areas of the state where there are natural gas distribution lines already in place, conversions of residential heating systems to natural gas have been robust," said Tom Murphy, Co-Director of the Penn State Marcellus Center for Outreach and Research. "Demand for distribution line extensions have been growing."

Pennsylvania's largest gas utility, UGI Utilities, Inc., spoke of significant growth in 2011 with 10,495 new residential heating customers, 7,362 of which having converted to natural gas.

Allen Westbrook, UGI Utilities, Inc. Vice President of Marketing also noted that 80 percent of those customers had switched from oil to natural gas. In addition, those customers have seen a $1,500 on average savings per year by converting.

Westbrook also discussed the costs associated with expansion, which can be between $250,000 and $1 million for placing a main line in/along highways or tapping into gathering lines.

"There is a reason why many rural areas do not have natural gas service. That is because even if the price of natural gas is cheap, the price of building pipelines to sparsely populated areas is very costly," said Pennsylvania's Consumer Advocate, Sonny Popowsky. "Clearly, it is more economical to serve 100 or 1000 customers off of a particular length of pipeline than it would be to serve 10 or 20."

Providing incentives to develop infrastructure allowing for future growth was also discussed during the hearing. Options included a Growth Extension Tariff for Gas (GET Gas), Municipal Cost Participation, as well as directing county and/or municipal Act 13 revenues to natural gas infrastructure development.

Video from the hearing will be made available on Senator Gene Yaw's website at www.senatorgeneyaw.com and The Center's website at www.rural.palegislature.us.

CONTACT:

Rita Zielonis, 717-787-3280 (Senator Yaw)
Barry Denk, 717-787-9555 (The Center for Rural PA)