Residents of Philadelphia Successfully Challenge Their Gas Utility and Secure Significant Victories for Affordable Utilities

Today, the Pennsylvania Public Utility Commission issued an order rejecting Philadelphia Gas Works’ (PGW) request for a $85.2 million annual rate increase. Instead, the Commission approved an annual rate increase of $26.2 million, a reduction of almost 70%, and ordered a series of adjustments to PGW’s rates and policies to advance affordability and equity.

POWER Interfaith, an organization of Pennsylvania congregations and individuals committed to racial and economic justice on a livable planet, intervened in the Commission’s review of PGW’s requested rate increase and advocated for equitable rate and policy changes. POWER was represented before the Commission by Earthjustice, a nonprofit public interest law firm.

In a series of wins for affordability and equity, the Commission significantly reduced the size of the rate increase, scaled-back residential fixed charges that hit low-income households hardest, ordered improvements to customer service and bill assistance for low-income customers, and eliminated PGW’s proposed lobbying expenditures that would have been paid for by ratepayers. Notably, the Commission ruled that low-income issues are within scope of rate cases such as this and that environmental issues are within its jurisdiction due to the Environmental Rights Amendment to Pennsylvania’s Constitution.

PGW is owned by the City of Philadelphia and serves approximately 500,000 Philadelphians, making it the nation’s largest municipally-owned utility. Much of the additional revenue from the rate increase would have been used to accelerate the replacement of gas mains across the city over the next three decades, an extremely expensive proposition that promises to increase rates in the future. That gas infrastructure plan is inconsistent with Philadelphia’s goal of reaching carbon neutrality by 2050, and an independent expert has estimated it could cost $8 billion.

Bishop Dwayne D. Royster, Executive Director of POWER Interfaith, said, “As people of faith we know that utilities must move rapidly away from fossil fuel systems in a way that does not heap more expense on those least able to pay. That’s why POWER’s members from all areas of Philadelphia contested this rate case. It just doesn’t make sense to raise rates to pay for something that is destroying our communities. We were motivated to engage in PUC [Public Utility Commission] proceedings for the first time because PGW, a city-owned utility, has failed to manage ratepayer funds prudently and has failed to provide any meaningful leadership to prepare to meet the city’s goal of carbon neutrality by 2050. POWER’s efforts keep money in the pockets of Philadelphia’s energy users, while limiting buildout of the fossil fuel infrastructure that is threatening communities with climate chaos.”

Rev. Dr. Chris Kimmenez, Executive Director, Healing Communities PA & Associate Pastor For Social Justice, The People’s Baptist Church said, “Fighting against rate increases and for sensible programs like energy efficiency and geothermal networks is critical because Philadelphia households on average spend around 6.7% of their income on energy, about double the national average, making Philadelphia one of the most energy-burdened cities in the United States. Low-income residents like members of my community can spend a much bigger part of their income on energy bills, forcing them to choose between energy and other essentials.”

Devin McDougall, Earthjustice attorney, said, “The important wins POWER secured in this case will help advance energy justice and protect energy affordability by sharply reducing the bill increases sought by PGW, limiting PGW’s uneconomic investments in fossil fuel infrastructure, strengthening protections for low-income customers, confirming the Commission’s jurisdiction to consider environmental issues, and barring the use of ratepayer funds for lobbying.”

The Commission’s order reducing the size of the rate increase is a significant win for affordability. PGW’s proposed increase would have raised monthly bills by 10% on average for residential customers. The Commission also scaled back residential fixed charges — the portion of a customers’ bill that does not change based on usage. Customers cannot reduce their fixed charge by conserving energy, and the fixed charge is the same for all residential customers, which means it impacts low-income households the most. Fixed charges also disincentivize energy efficiency by reducing the financial benefits of energy efficiency.

The Commission rejected PGW’s efforts to keep low-income issues out of the case, and ordered substantial improvements to PGW’s low-income policies. PGW will be required to improve its performance in identifying low-income customers and enrolling them in bill assistance. As the Commission noted, currently less than 50% of confirmed low-income customers are enrolled in bill assistance, and less than 33% of estimated low-income customers are enrolled. PGW will also be required to improve its coordination with other city agencies to better identify and serve low-income customers.

The Commission also rejected PGW’s arguments that the Commission lacked jurisdiction to consider expert testimony from POWER recommending that PGW investigate non-pipeline alternatives, which are means of reducing peak demand for gas (rather than constructing new gas infrastructure and passing those costs onto customers). These can include a variety of measures, including smart thermostats, weatherization, and the deployment of networked ground source heat pumps, also known as geothermal networks. These have the potential to significantly reduce bills for ratepayers by reducing gas infrastructure investments that lock-in fossil fuel use. The Commission found that it has a duty under the Environmental Rights Amendment to Pennsylvania’s Constitution to consider POWER’s recommendations for non-pipeline alternatives. Unfortunately, the Commission declined to order PGW to implement those recommendations, though the Commission suggested that a statewide rulemaking proceeding would be a better way to address the recommendations.

The Commission failed to require increased investment  in PGW’s Low-Income Usage Reduction Plan program proportional to any approved residential rate increase, as POWER’s expert testimony recommended. Such an investment would help low-income customers reduce their bills by reducing consumption through energy efficiency measures, as POWER’s expert testimony also recommended. Low-income energy efficiency programming is an essential measure for maintaining energy equity, especially as PGW seeks to hike bills.

POWER Interfaith is leading Pennsylvanians in demanding that their utilities do more to provide affordable clean energy to all, phase out fossil fuels, and prevent the ravages of climate change. POWER will continue to organize for these important goals and to build on the wins from PGW’s rate case. For more information about POWER Interfaith’s climate justice work, please contact Dionne Watts-Williams at dwattswilliams@powerinterfaith.