The Pennsylvania Public Utility Commission has approved a petition of UGI Utilities Inc. – Gas Division, UGI Penn Natural Gas Inc. and UGI Central Penn Gas Inc. to contribute proceeds stemming from a settlement with Tennessee Gas Pipeline Co to UGI Operation Share Energy Fund.

The Commission voted 5-0 to adopt the motion of Commissioner Wayne E. Gardner that will allow UGI to contribute the residential portion of the proceeds received from the settlement to the UGI Operation Share Energy Fund.

The UGI Companies will receive approximately $3.8 million in refunds over a three-year period with $2.4 million going to residential customers.

On May 15, 1995, Tennessee Gas Pipeline Co. filed a settlement agreement with the Federal Energy Regulatory Commission (FERC), which resolved issues related to Tennessee’s recovery of certain environmental remediation cost in rates.  The settlement established a cost recovery mechanism for recovery of remediation costs for the period beginning Feb. 1, 1992. 

The UGI companies have been paying the environmental surcharge to Tennessee and the amounts paid have been charged to customers, principally through purchased gas cost rates.  Over time, the funds collected through the surcharge exceeded Tennessee’s actual environmental remediation costs for the projects covered by the 1995 settlement.  Tennessee subsequently stopped collecting the surcharge from shippers in 2004 but continued to hold the over-collection under the terms of the 1995 settlement. 

Tennessee and the shippers on its system eventually negotiated the refund settlement to address the disposition of the environmental surcharge over-collection.  The refund settlement was approved by FERC, with a minor modification, by an order issued on Nov. 4, 2009.