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Are the Bill Paying Electricity and Natural Gas Residential Customers in Pennsylvania being Cheated?
Published by R. G. Lucas in Mis-Allocated Distribution Cost • 2/23/2011 4:47:24 PM
The U.S. Department of Energy's, Energy Information Agency (EIA) shows there are about 2.6 million residential natural gas (NG) customers, about 230,000 commercial NG customers, and about 5,000 industrial customers in Pennsylvania; yet the residential NG consumers in Pennsylvania are paying over 96% of the distribution cost markups over the citygate prices.



When comparing the prices per thousand cu.ft. of natural gas for each category of customer in Pennsylvania, clearly the residential customers are paying a much higher price than the commercial and industrial customers.



If we subtract the variable cost of the price of natural gas at the citygate, from each of the prices, it is very easy to see residential customers have experienced an increase in their markup for every thousand cu.ft. of natural gas used, while the increases to the commercial and industrial customers have been virtually zero and small, respectively.



When you combine this information about Pennsylvania with an estimated average annual residential natural gas bill of $1,600 per year. The total financial markup paid by the consumers of Pennsylvania come to a whopping, $909.8 millon per year (nearly $1 billon in Pennsylvania in disproportionate increases in the markups).

If only half of this $909.8 millon per year was allocated to theft, this $454.9 million per year would pay for the natural gas use of more than 280,000 homes in the state of Pennsylvania per year! This would be the equivalent of providing heating assistance for more than 10% of the residences using natural gas or it could highlight the potential that the bill paying customers are unknowingly paying for as much as 10% of the residences in Pennsylvania operating as energy thieves.

Perhaps it is time to figure out why the residential NG consumers in Pennsylvania are paying more each year for distribution. Is it time to find out how many NG thieves are operating in Pennsylvania.

Please, tell us what you think! If you would like a similar calculation for your state, please let us know.