##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________
 Commission file number 1-1398
 UGI UTILITIES, INC.
  Pennsylvania
(State or other jurisdiction of 
incorporation or organization)
    
    23-1174060
(I.R.S. Employer
Identification No.)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ




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##### 



UGI UTILITIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PAGESPart I Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2007,
September 30, 2006 and March 31, 2006
    
    
    1Condensed Consolidated Statements of Income for the three
and six months ended March 31, 2007 and 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 2007 and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    4 - 15Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    16 - 22Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    24Part II Other InformationItem 1A.
    
    Risk Factors
    
    
    25Item 6.
    
    Exhibits
    
    
    26Signatures
    
    
    
    
    27
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March 31,
    
    
    September 30,
    
    
    March 31,2007
    
    
    2006
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,062
    
    
    $
    2,942
    
    
    $
    3,582Restricted cash
    
    
    1,202
    
    
    
    2,697
    
    
    
    Accounts receivable (less allowances for doubtful accounts
of $14,841, $12,389 and $8,909,
respectively)
    
    
    184,700
    
    
    
    61,917
    
    
    
    121,363Accounts receivable  related parties
    
    
    5,236
    
    
    
    1,888
    
    
    
    2,984Accrued utility revenues
    
    
    56,116
    
    
    
    16,649
    
    
    
    32,876Inventories
    
    
    34,500
    
    
    
    162,610
    
    
    
    28,254Prepaid expenses
    
    
    4,491
    
    
    
    4,863
    
    
    
    4,895Other current assets
    
    
    17,507
    
    
    
    21,795
    
    
    
    10,604Total current assets
    
    
    313,814
    
    
    
    275,361
    
    
    
    204,558Property, plant and equipment, at cost (less accumulated depreciation
and amortization of $520,459, $503,046 and $341,126, respectively)
    
    
    1,059,256
    
    
    
    1,050,824
    
    
    
    665,213Goodwill
    
    
    162,633
    
    
    
    182,851
    
    
    
    Regulatory assets
    
    
    82,455
    
    
    
    72,919
    
    
    
    61,956Other assets
    
    
    25,139
    
    
    
    27,788
    
    
    
    29,608Total assets
    
    $
    1,643,297
    
    
    $
    1,609,743
    
    
    $
    961,335LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    20,000
    
    
    $
    20,000
    
    
    $
    Bank loans
    
    
    146,000
    
    
    
    216,000
    
    
    
    123,300Accounts payable
    
    
    75,877
    
    
    
    46,916
    
    
    
    55,129Accounts payable  related parties
    
    
    8,938
    
    
    
    14,768
    
    
    
    5,259Deferred fuel refunds
    
    
    12,695
    
    
    
    12,171
    
    
    
    7,504Other current liabilities
    
    
    77,585
    
    
    
    59,243
    
    
    
    44,971Total current liabilities
    
    
    341,095
    
    
    
    369,098
    
    
    
    236,163Long-term debt
    
    
    492,000
    
    
    
    492,000
    
    
    
    237,000Deferred income taxes
    
    
    168,543
    
    
    
    162,871
    
    
    
    161,248Deferred investment tax credits
    
    
    6,610
    
    
    
    6,803
    
    
    
    6,998Other noncurrent liabilities
    
    
    40,819
    
    
    
    31,872
    
    
    
    16,077Total liabilities
    
    
    1,049,067
    
    
    
    1,062,644
    
    
    
    657,486Commitments and contingencies (note 7)Common stockholders equity:Common Stock, $2.25 par value (authorized - 40,000,000 shares;
issued and outstanding -
26,781,785 shares)
    
    
    60,259
    
    
    
    60,259
    
    
    
    60,259Additional paid-in capital
    
    
    345,801
    
    
    
    345,801
    
    
    
    80,622Retained earnings
    
    
    191,966
    
    
    
    144,833
    
    
    
    161,467Accumulated other comprehensive (loss) income
    
    
    (3,796
    )
    
    
    (3,794
    )
    
    
    1,501Total common stockholders equity
    
    
    594,230
    
    
    
    547,099
    
    
    
    303,849Total liabilities and stockholders equity
    
    $
    1,643,297
    
    
    $
    1,609,743
    
    
    $
    961,335
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Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    498,816
    
    
    $
    321,645
    
    
    $
    798,140
    
    
    $
    565,318Costs and expenses:Cost of sales
    
    
    357,370
    
    
    
    238,193
    
    
    
    563,346
    
    
    
    409,439Operating and administrative expenses
    
    
    40,261
    
    
    
    27,459
    
    
    
    73,471
    
    
    
    49,445Operating and administrative
expenses  related parties
    
    
    4,166
    
    
    
    3,992
    
    
    
    6,627
    
    
    
    4,718Taxes other than income taxes
    
    
    5,165
    
    
    
    3,720
    
    
    
    9,728
    
    
    
    6,982Depreciation and amortization
    
    
    10,424
    
    
    
    6,295
    
    
    
    20,658
    
    
    
    12,483Other income, net
    
    
    (3,571
    )
    
    
    (1,220
    )
    
    
    (5,132
    )
    
    
    (3,181
    )413,815
    
    
    
    278,439
    
    
    
    668,698
    
    
    
    479,886Operating income
    
    
    85,001
    
    
    
    43,206
    
    
    
    129,442
    
    
    
    85,432Interest expense
    
    
    11,074
    
    
    
    5,320
    
    
    
    22,496
    
    
    
    10,956Income before income taxes
    
    
    73,927
    
    
    
    37,886
    
    
    
    106,946
    
    
    
    74,476Income taxes
    
    
    29,219
    
    
    
    14,857
    
    
    
    42,479
    
    
    
    29,522Net income
    
    $
    44,708
    
    
    $
    23,029
    
    
    $
    64,467
    
    
    $
    44,954
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Six Months EndedMarch 31,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    64,467
    
    
    $
    44,954Adjustments to reconcile net income to net cash used
by operating activities:Depreciation and amortization
    
    
    20,658
    
    
    
    12,483Deferred income taxes, net
    
    
    3,552
    
    
    
    2,351Provision for uncollectible accounts
    
    
    10,172
    
    
    
    6,980Other, net
    
    
    4,177
    
    
    
    780Net change in:Accounts receivable
and accrued utility
revenues
    
    
    (175,771
    )
    
    
    (104,183
    )Inventories
    
    
    128,110
    
    
    
    43,330Deferred fuel costs
    
    
    (1,439
    )
    
    
    (9,866
    )Accounts payable
    
    
    23,131
    
    
    
    7,587Other current
assets and
liabilities
    
    
    21,993
    
    
    
    (5,913
    )Net cash provided (used) by operating activities
    
    
    99,050
    
    
    
    (1,497
    )CASH FLOWS FROM INVESTING ACTIVITIES:Expenditures for property, plant and equipment
    
    
    (29,184
    )
    
    
    (21,878
    )Decrease in restricted cash
    
    
    1,495
    
    
    
    PG Energy Acquisition working capital settlement
    
    
    23,670
    
    
    
    Other, net
    
    
    (577
    )
    
    
    (535
    )Net cash used by investing activities
    
    
    (4,596
    )
    
    
    (22,413
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment of dividends
    
    
    (17,334
    )
    
    
    (17,294
    )(Decrease) increase in bank loans with maturities of
three months or less
    
    
    (70,000
    )
    
    
    112,100Repayments of debt including bank loans with maturities
greater than three months
    
    
    
    
    
    
    (120,000
    )Issuance of debt
    
    
    
    
    
    
    50,000Net cash (used) provided by financing activities
    
    
    (87,334
    )
    
    
    24,806Cash and cash equivalents increase
    
    $
    7,120
    
    
    $
    896CASH AND CASH EQUIVALENTS:End of period
    
    $
    10,062
    
    
    $
    3,582Beginning of period
    
    
    2,942
    
    
    
    2,686Increase
    
    $
    7,120
    
    
    $
    896
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
 1.
    
    Basis of Presentation
    Comprehensive Income.
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    44,708
    
    
    $
    23,029
    
    
    $
    64,467
    
    
    $
    44,954Other comprehensive income (loss)
    
    
    390
    
    
    
    144
    
    
    
    (2
    )
    
    
    1,258Comprehensive income
    
    $
    45,098
    
    
    $
    23,173
    
    
    $
    64,465
    
    
    $
    46,212
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
  Reclassifications.
 Use of Estimates.
 Revenue-Related Taxes.
 Recently Issued Accounting Pronouncements.
  - 5 -




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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
 2.
    
    PG Energy Acquisition
   Working capital
    
    $
    47,021Property, plant and equipment
    
    
    362,304Goodwill
    
    
    162,633Regulatory assets
    
    
    14,957Other assets
    
    
    4,033Noncurrent liabilities
    
    
    (23,619
    )Total
    
    $
    567,329
 3.
    
    Segment Information
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
  Three Months Ended March 31, 2007:
 Reportable SegmentsGas
    
    
    ElectricTotal
    
    
    Utility
    
    
    Utility
    
    
    OtherRevenues
    
    $
    498,816
    
    
    $
    458,999
    
    
    $
    34,877
    
    
    $
    4,940Cost of sales
    
    
    357,370
    
    
    
    334,175
    
    
    
    20,835
    
    
    
    2,360Depreciation and amortization
    
    
    10,424
    
    
    
    9,593
    
    
    
    822
    
    
    
    9Operating income
    
    
    85,001
    
    
    
    77,946
    
    
    
    6,728
    
    
    
    327Interest expense
    
    
    11,074
    
    
    
    10,407
    
    
    
    667
    
    
    
    Income before income taxes
    
    
    73,927
    
    
    
    67,539
    
    
    
    6,061
    
    
    
    327Total assets at period end
    
    $
    1,643,297
    
    
    $
    1,522,516
    
    
    $
    113,817
    
    
    $
    6,964Goodwill at period end
    
    $
    162,633
    
    
    $
    162,633
    
    
    $
    
    
    
    $
    
 Three Months Ended March 31, 2006:
 Reportable SegmentsGas
    
    
    ElectricTotal
    
    
    Utility
    
    
    Utility
    
    
    OtherRevenues
    
    $
    321,645
    
    
    $
    296,218
    
    
    $
    25,427
    
    
    $
    Cost of sales
    
    
    238,193
    
    
    
    222,989
    
    
    
    15,204
    
    
    
    Depreciation and amortization
    
    
    6,295
    
    
    
    5,468
    
    
    
    827
    
    
    
    Operating income
    
    
    43,206
    
    
    
    39,918
    
    
    
    3,288
    
    
    
    Interest expense
    
    
    5,320
    
    
    
    4,591
    
    
    
    729
    
    
    
    Income before income taxes
    
    
    37,886
    
    
    
    35,327
    
    
    
    2,559
    
    
    
    Total assets at period end
    
    $
    961,335
    
    
    $
    853,262
    
    
    $
    108,073
    
    
    $
    Goodwill at period end
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
 Six Months Ended March 31, 2007:
 Reportable SegmentsGas
    
    
    ElectricTotal
    
    
    Utility
    
    
    Utility
    
    
    OtherRevenues
    
    $
    798,140
    
    
    $
    733,428
    
    
    $
    59,772
    
    
    $
    4,940Cost of sales
    
    
    563,346
    
    
    
    527,975
    
    
    
    33,011
    
    
    
    2,360Depreciation and amortization
    
    
    20,658
    
    
    
    18,887
    
    
    
    1,762
    
    
    
    9Operating income
    
    
    129,442
    
    
    
    116,177
    
    
    
    12,938
    
    
    
    327Interest expense
    
    
    22,496
    
    
    
    21,178
    
    
    
    1,318
    
    
    
    Income before income taxes
    
    
    106,946
    
    
    
    94,999
    
    
    
    11,620
    
    
    
    327Total assets at period end
    
    $
    1,643,297
    
    
    $
    1,522,516
    
    
    $
    113,817
    
    
    $
    6,964Goodwill at period end
    
    $
    162,633
    
    
    $
    162,633
    
    
    $
    
    
    
    $
    
 Six Months Ended March 31, 2006:
 Reportable SegmentsGas
    
    
    ElectricTotal
    
    
    Utility
    
    
    Utility
    
    
    OtherRevenues
    
    $
    565,318
    
    
    $
    516,017
    
    
    $
    49,301
    
    
    $
    Cost of sales
    
    
    409,439
    
    
    
    382,909
    
    
    
    26,530
    
    
    
    Depreciation and amortization
    
    
    12,483
    
    
    
    10,843
    
    
    
    1,640
    
    
    
    Operating income
    
    
    85,432
    
    
    
    75,608
    
    
    
    9,824
    
    
    
    Interest expense
    
    
    10,956
    
    
    
    9,700
    
    
    
    1,256
    
    
    
    Income before income taxes
    
    
    74,476
    
    
    
    65,908
    
    
    
    8,568
    
    
    
    Total assets at period end
    
    $
    961,335
    
    
    $
    853,262
    
    
    $
    108,073
    
    
    $
    Goodwill at period end
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
 4.
    
    Regulatory Matters
   5.
    
    Revolving Credit Agreement
  6.
    
    Defined Benefit Pension and Other Postretirement Plans
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
  Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    1,386
    
    
    $
    1,309
    
    
    $
    65
    
    
    $
    32Interest cost
    
    
    4,288
    
    
    
    3,220
    
    
    
    242
    
    
    
    204Expected return on assets
    
    
    (5,469
    )
    
    
    (4,444
    )
    
    
    (152
    )
    
    
    (152
    )Amortization of:Prior service cost (benefit)
    
    
    61
    
    
    
    196
    
    
    
    (55
    )
    
    
    (55
    )Actuarial loss
    
    
    217
    
    
    
    427
    
    
    
    37
    
    
    
    48Net benefit cost
    
    
    483
    
    
    
    708
    
    
    
    137
    
    
    
    77Change in regulatory and other
assets and liabilities
    
    
    (64
    )
    
    
    (93
    )
    
    
    714
    
    
    
    698Net expense
    
    $
    419
    
    
    $
    615
    
    
    $
    851
    
    
    $
    775
 Pension Benefits
    
    
    Other Postretirement BenefitsSix Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    2,766
    
    
    $
    2,620
    
    
    $
    130
    
    
    $
    65Interest cost
    
    
    8,565
    
    
    
    6,442
    
    
    
    485
    
    
    
    408Expected return on assets
    
    
    (10,925
    )
    
    
    (8,892
    )
    
    
    (303
    )
    
    
    (305
    )Amortization of:Prior service cost (benefit)
    
    
    121
    
    
    
    392
    
    
    
    (110
    )
    
    
    (110
    )Actuarial loss
    
    
    433
    
    
    
    854
    
    
    
    74
    
    
    
    96Net benefit cost
    
    
    960
    
    
    
    1,416
    
    
    
    276
    
    
    
    154Change in regulatory and other
assets and liabilities
    
    
    (121
    )
    
    
    (182
    )
    
    
    1,429
    
    
    
    1,396Net expense
    
    $
    839
    
    
    $
    1,234
    
    
    $
    1,705
    
    
    $
    1,550
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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
  7.
    
    Commitments and Contingencies
      - 11 -




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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
     - 12 -




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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
      - 13 -




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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
  8.
    
    Related Party Transactions
     - 14 -




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UGI UTILITIES, INC. AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements
    - 15 -




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UGI UTILITIES, INC. AND SUBSIDIARIES
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
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UGI UTILITIES, INC. AND SUBSIDIARIES
 ANALYSIS OF RESULTS OF OPERATIONS
  2007 three-month period compared with 2006 three-month period
 Three Months Ended March 31,
    
    2007
    
    2006
    
    Increase(Millions of dollars)Gas Utility:Revenues
    
    $
    459.0
    
    
    $
    296.2
    
    
    $
    162.8
    
    
    
    55.0
    %Total margin (a)
    
    $
    124.8
    
    
    $
    73.2
    
    
    $
    51.6
    
    
    
    70.5
    %Operating income
    
    $
    77.9
    
    
    $
    39.9
    
    
    $
    38.0
    
    
    
    95.2
    %Income before income taxes
    
    $
    67.5
    
    
    $
    35.3
    
    
    $
    32.2
    
    
    
    91.2
    %System throughput  bcf
    
    
    49.8
    
    
    
    27.1
    
    
    
    22.7
    
    
    
    83.8
    %Heating degree days  % colder (warmer)
than normal (b)
    
    
    1.4
    %
    
    
    (13.0
    )%
    
    
    
    
    
    
    Electric Utility:Revenues
    
    $
    34.9
    
    
    $
    25.4
    
    
    $
    9.5
    
    
    
    37.4
    %Total margin (a)
    
    $
    12.1
    
    
    $
    8.8
    
    
    $
    3.3
    
    
    
    37.5
    %Operating income
    
    $
    6.7
    
    
    $
    3.3
    
    
    $
    3.4
    
    
    
    103.0
    %Income before income taxes
    
    $
    6.1
    
    
    $
    2.6
    
    
    $
    3.5
    
    
    
    134.6
    %Distribution sales  gwh
    
    
    281.9
    
    
    
    268.4
    
    
    
    13.5
    
    
    
    5.0
    %
  (a)
    
    Gas Utilitys total margin represents total revenues less cost of sales. Electric Utilitys
total margin represents total revenues less total cost of sales and revenue-related taxes,
i.e. Electric Utility gross receipts taxes, of $2.0 million and $1.4 million during the
three-month periods ended March 31, 2007 and 2006, respectively. For financial statement
purposes, revenue-related taxes are included in Taxes other than income taxes on the
Condensed Consolidated Statements of Income.(b)
    
    Deviation from average heating degree days based upon weather statistics provided by the
National Oceanic and Atmospheric Administration (NOAA) at airports located within our
service territory.
 Gas Utility.
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UGI UTILITIES, INC. AND SUBSIDIARIES
     Electric Utility.
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UGI UTILITIES, INC. AND SUBSIDIARIES
   2007 six-month period compared with 2006 six-month period
 Six Months Ended March 31,
    
    2007
    
    2006
    
    Increase(Millions of dollars)Gas Utility:Revenues
    
    $
    733.4
    
    
    $
    516.0
    
    
    $
    217.4
    
    
    
    42.1
    %Total margin
    
    $
    205.4
    
    
    $
    133.1
    
    
    $
    72.3
    
    
    
    54.3
    %Operating income
    
    $
    116.2
    
    
    $
    75.6
    
    
    $
    40.6
    
    
    
    53.7
    %Income before income taxes
    
    $
    95.0
    
    
    $
    65.9
    
    
    $
    29.1
    
    
    
    44.2
    %System throughput  bcf
    
    
    83.2
    
    
    
    50.1
    
    
    
    33.1
    
    
    
    66.1
    %Heating degree days  % warmer
than normal
    
    
    5.4
    %
    
    
    8.2
    %
    
    
    
    
    
    
    Electric Utility:Revenues
    
    $
    59.8
    
    
    $
    49.3
    
    
    $
    10.5
    
    
    
    21.3
    %Total margin (a)
    
    $
    23.5
    
    
    $
    20.1
    
    
    $
    3.4
    
    
    
    16.9
    %Operating income
    
    $
    12.9
    
    
    $
    9.8
    
    
    $
    3.1
    
    
    
    31.6
    %Income before income taxes
    
    $
    11.6
    
    
    $
    8.6
    
    
    $
    3.0
    
    
    
    34.9
    %Distribution sales  gwh
    
    
    530.9
    
    
    
    526.4
    
    
    
    4.5
    
    
    
    0.9
    %
 (a)
    
    Electric
Utilitys total margin represents total revenues less total cost of sales and revenue-related
taxes, i.e. Electric Utility gross receipts taxes, of $3.3 million and $2.7 million during the
six-month periods ended March 31, 2007 and 2006, respectively. For financial statement
purposes, revenue-related taxes are included in Taxes other than income taxes on the
Condensed Consolidated Statements of Income.
 Gas Utility.
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UGI UTILITIES, INC. AND SUBSIDIARIES
     Electric Utility.
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UGI UTILITIES, INC. AND SUBSIDIARIES
 FINANCIAL CONDITION AND LIQUIDITY
 Financial Condition
   Cash Flows
 Operating activities.
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UGI UTILITIES, INC. AND SUBSIDIARIES
 Investing activities.
 Financing activities.
 PG Energy Acquisition
  Regulatory Matters
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UGI UTILITIES, INC. AND SUBSIDIARIES
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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UGI UTILITIES, INC. AND SUBSIDIARIES
 
 ITEM 4. CONTROLS AND PROCEDURES
 (a)
    
    Evaluation of Disclosure Controls and ProceduresThe Companys management, with the participation of the Companys Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of the Companys disclosure
controls and procedures as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures as of the end of the period covered by this
report were designed and functioning effectively to provide reasonable assurance that the
information required to be disclosed by the Company in reports filed under the Securities
Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and forms, and
(ii) accumulated and communicated to our management, including the Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.(b)
    
    Change in Internal Control over Financial ReportingExcept as discussed below, during the quarter ended March 31, 2007, there has been no change
in the Companys internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.As previously disclosed in Item 9A, Controls and Procedures, of our 2006 Annual Report on
Form 10-K, for an interim period Southern Union Company was providing certain information
technology services to UGI Penn Natural Gas, Inc. (UGIPNG), a wholly owned subsidiary of
the Company, and assisting us in migrating certain transaction-based processes and
historical UGIPNG data to the Companys systems. The migration plan is substantially
complete. During October 2006, the Company implemented certain financial components of a
new information system (the UGI System) that supports our
human resource, accounting,
purchasing and payroll transaction processing functions. Pursuant to the migration plan,
UGIPNG began using certain financial components of the UGI System as of January 1, 2007. We
have extended internal control procedures over quarterly financial reporting to include
UGIPNG.
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UGI UTILITIES, INC. AND SUBSIDIARIES
 
 PART II OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
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UGI UTILITIES, INC. AND SUBSIDIARIES
 
 ITEM 6. EXHIBITS
  Exhibit No.
    
    Exhibit
    
    Registrant
    
    Filing
    
    Exhibit10.1
    
    
    Amendment dated March 20, 2007 to the Firm
Transportation Service Agreement (Rate Schedule
FT) dated October 1, 1996 between UGI Utilities
and Transcontinental Gas Pipe Line Corporation,
as modified pursuant to various orders of the
Federal Energy Regulatory Commission
    
    UGI Utilities, Inc.
    
    Form 8-K
(3/20/07)
    
    
    10.112.1
    
    
    Computation of ratio of earnings to fixed charges.31.1
    
    
    Certification by the Chief Executive Officer
relating to the Registrants Report on Form 10-Q
for the quarter ended March 31, 2007, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification by the Chief Financial Officer
relating to the Registrants Report on Form 10-Q
for the quarter ended March 31, 2007, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    
    Certification by the Chief Executive Officer and
the Chief Financial Officer relating to the
Registrants Report on Form 10-Q for the quarter
ended March 31, 2007, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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UGI UTILITIES, INC. AND SUBSIDIARIES
 
   UGI Utilities, Inc.
(Registrant)Date:  May 10, 2007
    By:
    /s/ John C. BarneyJohn C. BarneySenior Vice President - Finance
(Principal Financial Officer)  - 27 -




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UGI UTILITIES, INC.
 EXHIBIT INDEX
 12.1
    
    
    Computation of ratio of earnings to fixed charges.31.1
    
    
    Certification by the Chief Executive Officer relating to the Registrants
Report on Form 10-Q for the quarter ended March 31, 2007, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification by the Chief Financial Officer relating to the Registrants
Report on Form 10-Q for the quarter ended March 31, 2007, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32
    
    
    Certification by the Chief Executive Officer and the Chief Financial Officer
relating to the Registrants Report on Form 10-Q for the quarter ended March 31, 2007,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.