- Associated Press - Tuesday, April 21, 2015

HARRISBURG, Pa. (AP) - Philadelphia Gas Works could borrow money or boost its customer charge to deliver gas to whittle down the 65-year timeline the city-owned utility is on to replace 2,000 miles of pipeline deemed to be risky, state regulators said in a report released Tuesday.

Those suggestions were among seven given by the Pennsylvania Public Utility Commission in an assessment that the agency said was necessary because a large portion - two-thirds - of PGW’s pipeline infrastructure is cast iron or unprotected steel, high-risk pipelines that it said could be dangerous.

The utility also owns more than half of Pennsylvania’s high-risk gas pipelines, the utility commission said. Three-fourths of PGW’s high-risk pipelines in service - about 1,500 miles - are cast iron, the fourth-highest amount of any utility in the nation and about half of Pennsylvania’s cast iron, it said.

PGW serves just over 500,000 customers in Philadelphia. Its pipelines sprang more than double the number of hazardous leaks than any other natural gas distributor in Pennsylvania in 2013, the commission said.

“PGW’s aging infrastructure and leak rates are particularly concerning, given that its territory is largely urban and is a high-population area, which can pose a potential threat to life and property,” the utility commission said in the 60-page report.

A PGW spokesman, Barry O’Sullivan, said Tuesday that the utility’s first goal is safety and that it is already exceeding its utility commission-approved goals for replacing its most dangerous pipelines, put into place in 2013.

Still, PGW officials are interested in discussing ways to accelerate the replacement of the high-risk pipe and will go through the report in detail, O’Sullivan said.

The report comes at a time when utilities are seeing more people shift to using natural gas for home heating amid a natural gas production boom in Pennsylvania.

In a statement, Mayor Michael Nutter’s administration said it already is working with PGW to accelerate the process. PGW’s board endorsed a plan to increase the distribution charge to lower the timeline for cast-iron pipe replacement to 54 years, it said.

Most of Pennsylvania’s other utilities are working to remove their cast iron pipe in 22 years or less. But PGW’s current plan is to remove all cast iron pipes in 88 years, the report said, although its 2014 replacement rate put it on a schedule of about 65 years to remove all high-risk pipe.

That’s not aggressive enough, given the risk and the relatively high rate of leaks being sprung by PGW pipes, the utility commission said. That rate is also increasing, it said.

In addition to borrowing or raising rates, the commission suggested that PGW could end an $18 million annual payment to the city or cut administrative costs to funnel more money into pipeline replacement. Nutter said he opposes borrowing or ending the city’s $18 million payment.

Unprotected steel pipe, which is vulnerable to corrosion and slow leaks, was used extensively until the 1960s, when the use of plastic pipe grew, the utility commission said. Cast iron pipelines were used in the late 1800s and early 1900s, but they deteriorate over time and are vulnerable to disturbances caused by digging, seasonal frost heave or changes in groundwater levels that can result in a catastrophic failure, it said.

Under 30 percent of gas pipelines maintained by the 10 largest utilities in Pennsylvania - about 11,500 miles - are cast iron or unprotected steel, the commission said.

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