A Message to Our Customers: PGW’s Commitment to Ratepayer Equity
Posted on: Oct 21, 2022For well over a century, PGW has been providing reliable, affordable heat and hot water service to Philadelphia residents and businesses. As a city-owned utility, it is our responsibility to be good stewards of ratepayer dollars. We are not accountable to corporate shareholders - we are only accountable to you, our customers.
At PGW, we are committed to equity among and across our entire ratepayer base. Unlike investor-owned energy companies, we operate to break even, not to earn profits.
That’s why we want our customers to know that Pennsylvania’s Public Utility Commission (PUC) will soon make a decision that will impact ratepayer equity for decades to come.
Vicinity Energy, operator of the city’s underground steam loop and one of PGW’s biggest customers of natural gas by volume, has asked the PUC to renew an exceedingly low rate that they have enjoyed for over 25 years. Vicinity Energy is owned by Antin Infrastructure Partners, a European private equity firm, whose interests are to keep costs as low as possible to maximize profits for its shareholders.
Vicinity/Antin currently pays less than 10 cents per thousand cubic feet of natural gas ($.08/mcf). This rate was locked in almost three decades ago and has remained in place without any escalation to account for rising costs over the past decades. Now that PGW is regulated by the PUC, it is required to set rates for all its customers that are cost-based and non-discriminatory. PGW’s analysis (which is supported by the Pennsylvania Office of Consumer Advocate) shows that a cost-based rate for Vicinity would be at least $.70/mcf.
Just as concerning, Vicinity’s rate does not include other charges that PGW’s other customers pay, such as a monthly universal service charge to cover the cost of the subsidized gas provided to Philadelphia’s poorest, most vulnerable residents. Unlike other customers, Vicinity also does not pay an additional fee to replace and maintain the aging natural gas infrastructure under our streets, which is a vital component in PGW’s ongoing efforts to reduce greenhouse gas emissions and fight climate change.
In short, we believe that Vicinity/Antin’s current rate is a massive subsidy which has been shouldered by the rest of PGW’s customers. Any reduction in price for one customer means the bill increases for others.
PGW believes this special treatment for one customer is unfair to ALL customers – and not allowed by the Public Utility Code. Therefore, we have asked the PUC to reject Vicinity’s petition and set a cost-of-service rate that is fair to ALL of our customers.
We will be sure to continue to communicate with our customers about the outcome of this pending case.
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