Two administrative law judges have recommended that Philadelphia Gas Works should raise rates to upgrade its infrastructure, nearly doubling the speed at which the city-owned utility replaces its aging gas mains.
A typical residential customer would pay about $20 more per year to fund the program, which would allow PGW to replace its riskiest underground pipes in 48 years, up from the current 86-year pace.
The 106-page recommendation by Christopher P. Pell and Marta Guhl was posted by the Pennsylvania Public Utility Commission Friday. The earliest date the five-member PUC can vote on the recommendation is Jan. 28.
The commission has been a major impetus for PGW to upgrade its 3,024 miles of mains. About half the pipes are made of cast iron, which becomes brittle with age. PGW has more cast-iron mains, and more leaks, than any other gas utility in the state.
The judges recommended that PGW be allowed to increase the distribution system improvement charge, a fee that currently is assessed at up to 5 percent of the utility's distribution charge, which is the non-natural-gas portion of the monthly bill. PGW is seeking to increase that fee up to 7.5 percent, and also to "levelize" the charge to reduce variations reflecting how much the utility spends on pipe main replacement.
The judges agreed with PGW that it has no other financing options available to pay for the pipes. More short-term or long-term debt is unavailable. And PGW can't tap into more of its current cash without putting its bond agreements at risk.
The judges also recommended that PGW formally ask city government to waive the $18 million annual fee it collects from the utility, though the city has been unwilling to do so.
PGW proposed the rate increse after City Council last year nixed Mayor Nutter's proposal to sell the gas works to an investor-owned utility, which had planned to use private-sector financing to upgrade gas mains without an immediate rate increase.