PGW Files Request with Regulators to Increase Distribution Base Rates
Posted on: Feb 27, 2023The $85.8 million request will address rising costs, improve safety, and accelerate the City’s carbon reduction goals
(Philadelphia, Pa – February 27, 2023) – Philadelphia Gas Works (PGW) announced today that it has filed a base rate case with the Pennsylvania Public Utility Commission (PUC). The filing requests permission to increase rates by $85.8 million per year. If the request is granted, the bill for the average residential customer using 71 thousand cubic feet (Mcf) of natural gas per year would increase by about $3 a week or $12 a month.
PGW’s natural gas rates are made up of two main components: a delivery charge (or base rate) and a commodity charge (gas cost). The base rate reflects the cost of delivering natural gas to the customer’s residence, distribution system maintenance and customer billing costs. The gas cost is what PGW pays for natural gas and is passed on to the customer without markup.
Juxtaposed with today’s base rate filing, PGW filed a Gas Cost Rate (GCR) adjustment last week (Feb. 24), which will dramatically decrease the amount PGW customers pay for natural gas by 15.9% or $238.92 annually. All customers will see those savings effective March 1, 2023.
The base rate change request filed today will address the recent rise in inflation for labor, materials, information technology, construction equipment, and capital costs.
The requested base rate increase will also reduce the time needed to replace PGW’s mature, cast iron infrastructure by 12.4% to 33.1 years. Increased investment in PGW’s 6,000-mile distribution system will improve system safety and further reduce methane emissions. As the energy provider that works for Philadelphia, and is owned by the City, the company is fully committed to supporting the City’s 2050 goal of carbon neutrality. Upgrades both reduce fugitive emissions and eliminate the cost of ongoing repairs that PGW customers would have to pay.
“PGW strives to deliver on our promise of safe, reliable, affordable, and sustainable energy,” said Seth Shapiro, PGW’s President & CEO. “We do not take lightly adding any dollars to our rate base; but we are committed to robust social programs to protect our most vulnerable customers and to doing everything possible to keep our systems operating safe for all Philadelphia residents. We constantly seek to find a balance between maintaining rates low enough to try to meet our affordability goals, while also sufficient to meet our safety, reliability and sustainability goals.”
Over the last two years, PGW has launched several initiatives to do more with less, carefully manage PGW’s expenses, and manage the costs of rate increases, including:
- A facilities consolidation that will centralize PGW’s operations into three buildings and cut its emissions by half and the company’s expenses by $100 million over the next 25 years.
- Launched new technologies to serve our customers more effectively and more efficiently with retail cash options and partnerships with Neighborhood Energy Centers.
- Lowered the monthly bill amounts for low-income customers enrolled in PGW’s Customer Responsibility Program.
- Launched the PGW Marketplace, where customers can receive significant discounts on smart thermostats that regulate energy usage and help lower monthly energy bills.
“Natural gas is the cleanest, most reliable, and cost-effective energy solution to meet the City’s energy needs, and it’s estimated that natural gas could be up to 50 percent more economical than other fuels for the next 25 years,” Shapiro said. “PGW recognizes our responsibility to help our customers better afford their natural gas bills and enjoy their natural gas service. We urge our customers to call us today to take advantage of programs and initiatives to reduce their energy burden and provide payment assistance.”
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