There’s no debate at Philadelphia Gas Works that climate change is real.
PGW, saying its costs are rising but its sales are falling because of warmer weather, on Monday requested a $70 million rate increase that would boost monthly residential bills by $10.59, or 11.3 percent.
The request to the Pennsylvania Public Utility Commission, PGW’s first since 2009, says that the city-owned utility’s revenue has suffered from warmer weather and more efficient energy use, and that there is only so far it can go to cut costs and maintain a safe system.
“We recognize the pressures on hardworking families and businesses in Philadelphia,” PGW’s chief executive, Craig White, said in a statement. “That's why we've worked so hard to reduce our operating costs and identify new sources of revenue since our last rate increase.”
White cited the utility’s rising costs for employee health care, equipment and regulatory compliance.
The request was not unexpected: PGW has telegraphed a need for higher rates since 2014, when City Council killed its planned $1.9 billion sale to an investor-owned utility. But as recently as November, PGW told city officials that it projected it would need a $40 million rate increase in 2017.
“For some reason, they filed a request for $70 million,” said Robert Ballenger, an energy lawyer with Community Legal Services.
Barry O’Sullivan, PGW’s spokesman, said the utility’s forecasters revised the estimates recently after changing the method of projecting energy use due to warming weather patterns. Since 2009, sales volumes have dropped by 11 percent.
PGW has switched its forecasting method to a 10-year average from the 30-year average it previously used to calculate the city’s projected need for heat. With warming trends, the 30-year projection has become increasingly inaccurate, leading the utility to boost customer bills through its “weather normalization adjustment,” O’Sullivan said.
“We are proposing a move to a 10-year average that is more reflective of what we see in warming weather trends,” he said. “That projection is more accurate, and indicated that projected customer demand will be lower.”
The PUC is likely to take about nine months to investigate the request and make a decision.
If the request is granted, the bill for a typical residential account, with use of 76 thousand cubic feet (Mcf) a year, would increase to $104.65 a month, from $94.06, or about 11.3 percent.
The total bill for a typical commercial customer account, with use of 332 Mcf a year, would increase to $342.15 a month from $327.07, or about 4.6 percent.
Rates for a typical industrial customer account, with use of 717 Mcf year, would decrease to $694.58 per month from $712.81 , or by about 2.6 percent.