PGW wants its customers to buy less gas

Touting both environmental and financial benefits, Philadelphia Gas Works wants to spend $54 million over the next five years to help more than 85,000 customers buy less of its product.

The city-owned utility said its plan, which targets ordinary residential and commercial customers and expands its low-income conservation program, would be paid for with a temporary surcharge that would cost an average residential customer $5.64 a year.

If the state Public Utility Commission approves, PGW said, the program would save more than $100 million over its five-year lifetime and reduce carbon dioxide emissions 1.25 million tons. That is the equivalent, the utility said, of "taking 200,000 cars off Philadelphia streets."

For customers who participate, the savings would be immediate and extend well beyond the program's life, said PGW vice president Steven Hershey. But Hershey said all of PGW's 500,000 customers would benefit because the utility would reduce its costs for storing and transporting gas, and for borrowing.

"After the fifth year, the surcharge is gone and everybody's costs begin to decline," he said.

Hershey said the utility was also exploring whether federal stimulus funds might cover some of the costs.

He said PGW's plan "will create 600 to 1,000 jobs" over the next five years. "But even if we get no stimulus funds, at the end of five years, the program's benefits will outweigh its costs," he said.

Under its proposal, PGW is hoping to partner with Peco Energy Co., the city's electric utility, to jointly promote conservation. Peco and other Pennsylvania utilities are under state mandate to reduce overall electricity demand 3 percent by 2013, and costly peak demand 4.5 percent.

Hershey said PGW had suggested that it take the lead among shared residential customers in the city, with Peco taking the lead among commercial customers.

For instance, PGW's goal this year would be to weatherize the homes of about 3,000 low-income customers to reduce their need for gas. Under its proposal, PGW would also install about 10 compact fluorescent light bulbs (CFLs) while at each home. The bulbs, though relatively expensive, use one-fourth as much energy as incandescent bulbs.

Peco spokeswoman Cathy Engel said the utility, which serves about 1.6 million city and suburban customers, would consider some form of cooperation. Under the state's mandate, Peco must submit a demand-reduction plan to the PUC by July 1.

"We are looking forward to studying PGW's filing," Engel said, adding that Peco is considering offering free CFLs to customers. "If you look at the programs that have been successful for other utilities, they include large-scale CFL giveaways," Engel said.

Pennsylvania gas utilities are not under mandates to reduce demand, but Hershey said PGW considers its proposal an opportunity to help its customers and the environment while also helping itself.

"It's a green program, it's an economic program, and it's a consumer program," he said.

PGW said its goals included weatherizing more than 37,000 customers' homes, including those of 21,000 low-income customers. It would also subsidize the purchase of high-efficiency furnaces, boilers, or water heaters for more than 45,000 customers.

Hershey said that if customers purchased such equipment, PGW would pick up 80 percent of the extra cost of choosing a high-efficiency unit.

PGW also plans conservation improvements at nearly 200 municipal facilities and more than 900 commercial and industrial sites, and would subsidize energy-efficient design in more than 3,000 new buildings.

Hershey said the home weatherizations, including an energy audit to look for air leaks, would be aimed at customers "who use more than the average amount of gas, because those are where the highest payoffs are."

He said PGW's weatherizations would be partly or fully subsidized, depending on income, and would also help Peco cut peak power demand.

"If you reduce air leaks, it would also reduce air-conditioning costs," he said.