9/8 – PGW Proposes Rate Hike to Meet Infrastructure Needs
Tuesday, September 8th 2015
From StateImpact PA:
Philadelphia Gas Works says it can cut in half the time it takes to replace its leaky pipes if it raises the customer infrastructure surcharge by 2.5 percent. For the average resident who uses natural gas to heat their home, that would mean an increase of $1.65 to $1.70 each month.
Philadelphia has struggled to replace about 1500 miles of mains — the pipes that run beneath city streets — some of which were installed more than a century ago. These cast iron and bare steel pipes include about one-quarter of the city’s gas pipes and the leaks can be deadly. In 2011, an explosion in Allentown killed 5 people, including a newborn. Leaks also pose environmental hazards because methane is a powerful greenhouse gas, and contributes to climate change at a faster rate than CO2.
PGW has been replacing its older cast iron and bare steel pipe with the more state-of-the-art plastic pipe, but the cost is high and the pace has been slow. It takes an estimated $1 million to fix each mile of pipe. Current plans have PGW replacing all those lines within the next 88 years. But with the increase in a surcharge, known as the Distribution System Improvement Charge (DISC), the utility says it can replace those pipes within 45 years.
PGW reported 7,600 leaks in 2014, up from 6,200 in 2013. The number of hazardous leaks, meaning they could threaten life and property, rose to 3,448 last year from 3,122 in 2013.
The proposal to increase the surcharge comes several months after the Public Utility Commission, which has oversight of the utility’s rates, set out seven alternatives for paying for a pipe-replacement program. One of those recommendations included increasing the surcharge.
The PUC’s recommendation of raising the current cap of 5% of a consumer’s bill to 7.5% predicted an influx of $11 million and a reduction of the time needed to replace all the leaking pipes to 51.5 years.
Hiking the cap to 12% — which the PUC said would add $4.42 a month to the average customer’s bill — would generate up to $31 million and cut the total replacement time to 36.8 years, the PUC said in a 93-page report.
Read more at StateImpact PA…
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