PHILADELPHIA (KYW Newsradio) — Philadelphia’s goal of becoming carbon neutral by 2050 faces many challenges, but perhaps none more daunting than what to do with the fossil fuel business it owns.
Philadelphia Gas Works (PGW) is the largest municipally owned utility in the country, employing 1,600 people and providing affordable heat to 500,000 customers.
Climate change, though, has forced the city to contemplate a future without natural gas. The question of how to guide PGW into such a future was the subject of a study released last week. It’s clearest lesson is that the transition is not going to be easy.
“There’s no silver bullet here,” said Christine Knapp, director of the Office of Sustainability, which co-authored the study. “This is going to be all combinations of things to try out.”
The study proposes three pilot projects to try in the “near term”:
• Weatherization, to reduce household energy consumption. This is an effort that is already underway and has reduced demand for natural gas.
• Biomethane gas capture from waste that the city already generates.
• A feasibility study for network geothermal, using pipes to transport energy so the technology is already familiar to the workforce.
The study also discusses electrification. Converting natural gas customers to electric heat powered by wind and solar is potentially the most efficient carbon reduction strategy, but, Knapp noted, it’s not conducive to keeping PGW a robust employer and supplier of energy.
“That’s the crux of this whole thing, is finding the things that are both decarbonization and good business models for PGW,” she said.
Adam Nagel, campaign manager of PennFuture, is pleased that the city is wrestling with the question, but he’s skeptical that PGW is fully on board with diversification.
“PGW is a gas utility and intends to remain a gas utility,” Nagel said. “I think that that is ultimately short-sighted, especially given the challenges we face due to climate change in Philadelphia.”
Nagel points to emails, reported by the news site StateImpact, that show PGW’s lobbyist privately aiding efforts to pass a bill in Harrisburg that would pre-empt cities from switching customers to electric heat.
Nagel thinks the study, similarly, short-shrifts the need for electrification.
“It is difficult not to view this study as somewhat of a tandem to the reported involvement of PGW in the discussions in Harrisburg surrounding pre-emption of electrification,” he added.
PGW spokesperson Richard Barnes declined to comment on the emails, or specifically on electrification, but insisted PGW is invested in diversification.
“PGW looks forward to developing and incorporating any innovative ideas and solutions that can lead to safe, reliable and economically meet Philadelphia’s clean energy needs,” he said.
In fairness, Knapp points out, PGW is caught in a tangle of regulatory and economic overseers that limit its ability to make bold moves. She said PGW recently asked the Public Utility Commission (PUC) to replace a small amount — 5% — of the shale gas it distributes with more environmentally sound, renewable biogas and was turned down.
The PUC said the biogas pilot project was too expensive and would violate a state law that requires state-regulated utilities to purchase the lowest cost fuel.
That’s why, Knapp said, the mayor sent a letter to the PUC, the city Gas Commission and the Philadelphia Facilities Management Corporation, along with the study, asking them to each use their regulatory oversight to ensure PGW can survive in a lower carbon future.
This all became the city’s problem several years ago, when City Council scuttled then-Mayor Michael Nutter’s plan to sell the utility for $1.86 billion, which would have shored up the pension fund and gotten the city out of the energy business.
“In some ways, I’m glad we held onto it,” Knapp said, “because I would rather have a values-driven owner, like the city, than investors driving what comes next.”
The downside, she said, is that PGW does not have the authority or the money to plot a new future for itself.
“Their current structure is they can only collect rates from natural gas customers to maintain the natural gas system,” Knapp explained. “They don’t have a start-up investor who can help them try a new business model. We have to figure out a way to allow them to do something different than what they’re doing now. Otherwise, all of this is good ideas that won’t go anywhere.”