Pennsylvania Propane Gas Association Opposes Unfair Subsidizing of Natural Gas

Harrisburg, PA (March 5, 2017) — The Pennsylvania Propane Gas Association (PAPGA) is focused on stopping the passage of a bill, HB 107. HB 107 is under consideration by the Pennsylvania House Consumer Affairs Committee, chaired by Representative Robert W. Godshall (R- Montgomery). HB 107 can be reviewed at: http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2017&sessInd=0&b illBody=H&billTyp=B&billNbr=0107&pn=0084

HB 107 would create a new Distribution System Expansion Charge or “DSEC,” allowing regulated natural gas utilities to petition the Public Utility Commission (“PUC”) to recover costs for the extension of natural gas lines to unserved and underserved areas of the Commonwealth, including recovery of the costs of converting customers’ internal piping and appliances. The extensions and conversions would be financed through charges spread across the entire existing customer base of the utility. The DSEC customer surcharge would be 2.5% of the total amount billed to all customers of the company, although the bill allows for PUC waiver of this percentage to allow a higher surcharge. In effect, the bill socializes the cost of new natural gas extensions at a time when existing natural gas infrastructure is in significant need of upgrading and is already being funded by a Distribution System Improvement Charge (“DSIC”) of 7.5% to improve safety and reliability.

HB 107 could have a tremendously detrimental influence on Pennsylvania’s billion-dollar Propane Industry by unfairly subsidizing uneconomic natural gas extension. Pennsylvania’s Marcellus Shale produces significant new amounts of both propane and natural gas. HB 107 assists those in Pennsylvania who want to take advantage of the currently favorable natural gas pricing that has accompanied Marcellus Shale development, without consideration of the detriment to other fuels. Propane is also a product of the Marcellus Shale. Increased use of natural gas can realistically be expected to reduce the use of propane within the Commonwealth, at a time when Pennsylvania propane production already outstrips Pennsylvania use by a margin of some 4 to 1. Why would the General Assembly assist one portion of Pennsylvania’s economy, natural gas, while hurting other Pennsylvania industries, including propane?

A legislative hearing on HB 107 was held on April 26, 2017. Although the natural gas utilities and utility law group predictably favored the bill, there was less enthusiasm from the various consumer advocates, who testified. The PUC has not taken a position on the bill, but reminded the Committee that the bill was a significant departure from current social policy for regulated public utilities, which allowed subsided costs only for public safety improvements. HB 107 provides for replacement of major appliances and gas lines inside a home during the conversion to natural gas.

PAPGA opposes HB 107 because in a competitive fuel market it picks winners and losers, favoring natural gas over other fuels including propane. PAPGA maintains that propane can be used for any purpose natural gas is used for, and propane has the added advantage of being portable, a quality that does not apply to natural gas.

The PAPGA needs your help on opposing HB 107. During the first phase, the Association would ask that, particularly if you are in the legislative district of and/or know one of the following committee members to please contact Kathy Speaker MacNett, our PAPGA lobbyist, at

for pertinent information to reach out and express our opposition. Names of members of the Consumer Affairs Committee appear below. More information will follow to involve more of our membership if the bill is reported from Committee.

THE TIME FOR ACTION IS NOW. OPPOSE SOCIALIZATION OF NATURAL GAS EXTENSION. GET INVOLVED. OPPOSE HB 107.