PUC critical of PGW's attempt to curb generous conservation program
Maeetta Hardy did not have the resources to replace the furnace of the Germantown house where her family has lived for nearly four decades. "God knows that stove was old," she said.
Maeetta Hardy did not have the resources to replace the furnace of the Germantown house where her family has lived for nearly four decades. "God knows that stove was old," she said.
So Hardy welcomed a Philadelphia Gas Works contractor who recently installed an efficient, new gas furnace and hot-water system in her 116-year-old house, at no charge. "I wished I had the money to fix the things, but I don't," said Hardy.
Hardy, 69, is among about 2,100 PGW low-income customers who received weatherization and efficiency improvements in the last year. The rationale for targeting the heaviest consumers for improvements is that it makes their bills more affordable, reducing costly defaults and shutoffs. It also shrinks the subsidies paid by PGW's other customers to support low-income customers.
But PGW has proposed dramatic cuts to the conservation efforts. The city-owned utility says the programs cost it $8.5 million in lost revenue through 2015 from reduced gas sales, a significant hit while PGW is ramping up expensive efforts to replace its aging gas system.
"The company simply cannot afford to continue absorbing greater levels of DSM (demand-side management) program costs," PGW said in a filing with the Pennsylvania Public Utility Commission.
PGW's challenges are magnified compared with other utilities' because PGW serves such a high concentration of low-income customers.
PGW has 71,000 customers eligible for the conservation work under the state's Low Income Usage Reduction Program, twice as much as the next closest gas utility, Peco Energy.
While all utility programs do the kind of work that PGW did for Hardy, the $7.6 million that PGW spent last year compares to $12.3 million by the seven other utilities regulated by the PUC combined.
PGW has touted the program's success since it started in 2010. It spent $44.1 million for 8,500 projects in five years, saving 373 million cubic feet of gas. The upgrades cut carbon emissions, created up to 390 jobs, and reduced support from other PGW customers by $7.2 million, or $54 million over the lifetime of the work.
"Studies show that conservation programs are the best way to handle low-income payment problems," said Liz Robinson, executive director of the nonprofit Energy Coordinating Agency, a PGW contractor.
Despite the success, PGW in 2014 proposed to dramatically cut its annual budget to weatherize low-income homes from $7.6 million to $2 million. PGW planned to put the cuts into place last year, but its proposal met stiff resistance from consumer advocates.
PGW later revised its budget to $3.2 million, which it said was still more than double the support it is mandated to provide under state law. The PUC, in a preliminary vote June 30, recommended a budget of nearly $5.9 million, which is more than any other gas utility in the state.
Program supporters objected to any cuts at all. "There's a substantial need that remains," said Josie B.H. Pickens, a Community Legal Services lawyer representing several low-income advocacy groups.
The commission is now awaiting a vote on a final order, which may come as early as Thursday. The new conservation plan would go into effect on Sept. 1, the start of the utility's fiscal year.
PGW said it might provide more money for conservation if the PUC approved new measures to allow it to raise rates to compensate for the lost sales. But the PUC rejected the utility's proposal for a Conservation Adjustment Mechanism and an incentive payment system, saying that those would best be addressed in a rate-increase proceeding.
The utility says it only wants to take a balanced approach to energy efficiency.
"Our commitment to supporting conservation efforts remains as strong as ever," said Barry O'Sullivan PGW's spokesman. "We're focused on implementing a DSM program that is both robust and prudent, in terms of our mission statement and how we run the company."
Low-income customers often live in poor-quality housing that is less energy efficient. A typical PGW residential customer uses about 900 therms, or hundred cubic feet, a year. Low-income customers eligible for PGW's weatherization program use about 1,400 therms a year, said Steve Luxton, director of conservation for the Energy Coordinating Agency (ECA).
Hardy's three-story residence on East Clapier Street in Germantown, by contrast, uses 2,778 therms a year, said Luxton. He said the new high-efficiency furnace and water heater that ECA installed recently for about $3,500 would reduce Hardy's consumption by 700 to 800 therms, or nearly 30 percent.
Hardy's home was previously weatherized and insulated under a different program. "The heater was the last big opportunity to save energy," said Luxton.
The PUC approved a separate PGW proposal to extend the conservation program to low-income multifamily housing. But it rejected PGW's proposal to incentivize customers to install small efficient co-generation units to generate heat and electricity simultaneously.
Although some commissioners said PGW's proposal to encourage fuel-switching was commendable, it would actually increase demand for gas and suggested it did not belong in a program aimed an reducing energy load.
"It's the right church, but the wrong pew," said PUC member David Sweet, who said PGW should take "no negative inference" that most of its proposals were rejected.
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