Philadelphia Gas Works on Thursday won approval for a plan to raise rates, with the aim of nearly doubling the speed with which the city-owned utility replaces its aging and leaking gas mains.
The Pennsylvania Public Utility Commission unanimously approved PGW's proposal to boost a monthly surcharge on customer bills to generate about $11 million more a year. The new funds will allow the utility to replace its riskiest underground pipes in 48 years, up from the current 86-year pace.
A typical residential bill would go up about $20 a year with the increased fee, called the distribution system improvement charge.
Under the plan, PGW is allowed to increase the fee to 7.5 percent, from 5 percent, of the utility's distribution charge, which is the non-natural-gas portion of the monthly bill.
Commissioners said they were mindful that the fee boost would place more of a burden on PGW's low-income customers, and they encouraged the utility to pursue efficiencies or new sources of revenue to offset the increase.
"We are asking PGW's ratepayers to contribute more toward the safety of their underground natural gas infrastructure," Vice Chairman Andrew G. Place said in a statement. "However, we also need PGW to ensure every opportunity for efficiency has been pursued in order to accelerate this infrastructure replacement."
The PUC has applied considerable pressure on the city to step up the rate at which it replaces gas mains. An outbreak of fatal explosions nationwide five years ago - including a 2011 explosion that killed a PGW worker - focused attention on aging gas-utility systems.
About half of PGW's 3,024-mile distribution system consists of cast-iron mains, which grow brittle with age. PGW has more cast iron, and more leaks, than any other gas utility in the state.
PGW's challenge in funding its gas-main program was an impetus behind the Nutter administration's failed attempt to privatize the utility in 2014. Private investors said they could borrow funds to accelerate infrastructure improvements without a need for an immediate rate increase.
"The system is old and leaky and endangers the public safety," Commissioner Robert F. Powelson said. "The sole issue is how to accelerate PGW's main replacement and repair in such a manner that is fair to customers."