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BIRDSBORO CORPORATION v. PENNSYLVANIA PUBLIC UTILITY COMMISSION AND UGI CORPORATION (10/16/79)

decided: October 16, 1979.

BIRDSBORO CORPORATION, PETITIONER
v.
PENNSYLVANIA PUBLIC UTILITY COMMISSION AND UGI CORPORATION, RESPONDENTS



Appeal from the Order of the Pennsylvania Public Utility Commission in case of Birdsboro Corporation v. U.G.I. Corporation, Docket No. C. 22016.

COUNSEL

Stephen A. George, with him Buchanan, Ingersoll, Rodewald, Kyle & Buerger, for petitioner.

Louise A. Russell, Assistant Counsel, with her Shirley Rae Don, Deputy Chief Counsel, and George M. Kashi, Chief Counsel, for respondent, Pennsylvania Public Utility Commission.

Kenneth R. Myers, with him Morgan, Lewis & Bockius, for respondent, UGI Corporation.

President Judge Bowman and Judges Crumlish, Jr., Mencer, Blatt, DiSalle, Craig and MacPhail. Judges Wilkinson, Jr. and Rogers did not participate. Opinion by Judge DiSalle.

Author: Disalle

[ 46 Pa. Commw. Page 482]

In this appeal Birdsboro Corporation (Petitioner) seeks review of a decision by the Pennsylvania Public Utility Commission (Commission) dismissing Petitioner's complaint against UGI Corporation (UGI), the other Respondent, which alleged that the minimum annual bill provision in Rate LF under

[ 46 Pa. Commw. Page 483]

UGI's gas tariff was unjust and unreasonable, and, under the circumstances of this case, a violation of Section 301 of the Public Utility Law.*fn1 We affirm.

Petitioner is a manufacturing concern located in Birdsboro, Pennsylvania. Its principal products are specialty steel castings and machinery used in the energy, defense and steel industries. UGI is a public utility serving gas supplied by Columbia Gas Transmission Corporation to customers in thirteen counties in eastern Pennsylvania. From 1965 until June 4, 1974, UGI offered a special promotional rate, contained in Tariff Gas -- Pa. P.U.C. No. 3, for customers having a high usage and a high load factor (Rate LF). Under Rate LF each customer agreed to a Daily Contract Requirement (DCR) not lower than 100 mcf*fn2 of gas. Every month the customer contracted to pay a demand charge plus a flat charge for all gas taken. At the end of each billing year the customer was obligated to pay a minimum amount equal to a 65% load factor (65% of the DCR multiplied by the number of billing days in the year). This arrangement benefits the utility because it requires less investment in facilities and less operating expenses. In return, the customer is charged less under Rate LF than under Rate N.*fn3 Rate N does not require a high load factor and was available to Petitioner. The 65% load factor in Rate LF thus permitted UGI to identify and offer economical service to customers having a high load factor without discriminating against Rate N customers.

Since 1971, Petitioner had contracted under Rate LF for a 1,000 mcf DCR or 365,000 mcf each year. It

[ 46 Pa. Commw. Page 484]

    therefore was obligated to pay for 237,250 mcfs (65% of 365,000) annually, irrespective of the amount of gas actually used. Petitioner alleges that a company curtailment of the gas supply during the 3 month period of its highest needs in 1975-76 prevented it from using its 65% minimum load factor. Therefore, the minimum bill, argues Petitioner, is an unjust and unreasonable penalty for compliance with the curtailment plan and is thus a violation of Section 301 of the Public Utility Law. Petitioner seeks an order precluding UGI from collecting the difference between ...


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