PUC to pressure city on replacing aged gas mains

In the aftermath of the city's failed attempt to sell Philadelphia Gas Works, state regulators on Monday announced plans to step up pressure on the city to accelerate its 88-year gas-main replacement schedule.

The Pennsylvania Public Utility Commission said it would conduct an in-depth analysis of PGW pipeline safety with an aim of forcing the city-owned utility to spend more money on replacing hazardous mains.

"We will take an in-depth look at PGW and determine what may be done to accelerate this process and avoid tragic accidents, while at the same time being mindful of how much of a burden ratepayers can bear," PUC Chairman Robert F. Powelson said in a statement.

In an interview, Powelson and Comissioner James H. Cawley said the commission might try to force the city to forgo the $18 million annual dividend it now receives from PGW to reduce the impact on customers for gas-main repairs. PGW customers already pay the highest rates in the region.

"Is that really an appropriate transaction that needs to take place if we're really focusing on pipeline replacement and safety?" Powelson said of the city's $18 million fee.

The PUC had hoped the city would sell PGW last year, saying private owners could accelerate gas-main replacement by spreading the costs out over decades. As a municipal utility, PGW finances infrastructure repairs out of current funds on a "pay-go" basis.

The accelerated gas-main replacement program was one of the main selling points of the Nutter Administration's proposal last year to sell the utility for $1.86 billion to UIL Holdings Corp. City Council declined to hold hearings on Nutter's proposal and the deal collapsed in December.

PGW operates one of the oldest, leakiest gas distribution systems in the nation, and the city-owned company is replacing pipe at a slower pace than any other Pennsylvania utility, according to state regulators.

Nearly two-thirds of PGW's 3,024 miles of mains that deliver natural gas to city homes are considered "at risk" - they are made of aging cast iron and unprotected steel, more prone to breakage. Half its gas mains are made of cast iron - only one other utility in the nation has a higher percentage of cast-iron mains, according to federal data.

Powelson said the review is expected to be completed by April.

The analysis will review the current condition of PGW's system integrity, analyze PGW's current pipeline replacement schedule and identify impediments to pipeline replacement by PGW and means to accelerate replacement.

Source: Philly.com