In the past, climate advocates had been frustrated by PGW’s lack of public engagement on climate issues. In the spring, as part of the same ratemaking case, PGW had sought information about members of the environmental groups that had intervened in the case. The groups fought back, saying the move would have violated their First Amendment rights and that it was retaliation for their participation in the case. A judge agreed, and denied PGW the information.
The proposed settlement will have to be reviewed and approved by an administrative law judge, before being passed on for approval by the Pennsylvania Public Utility Commission.
A spokesman for PGW said the utility “cannot comment on pending proceedings” but referred to a message to its customers online that states if the new rates are approved, they “will maintain the company’s financial health, further modernize its infrastructure, and deliver safety and quality of life enhancements for its customers.”
PGW agrees to reduce planned rate hikes, review its warm winter fee
PGW’s original proposed rate hike for fiscal year 2026 would have increased the average residential customer’s monthly bills by about $12 a month, from $92.60 to $104.61, according to the PUC. But the new settlement, which is an agreement worked out with all parties to the rate hike case, including those who strictly advocate in the interest of affordability, as well as a coalition of environmental groups collectively known as the Energy Justice Advocates, reduces that rate hike by more than 40%.
The utility also agreed to review how it calculates a surcharge known as “weather normalization” to be more in line with a warming climate. When winters are warmer than expected, which is increasingly the case due to climate change, and customers use less gas to heat their homes and buildings, the utility can make up for the loss through an added charge. It also credits funds to customers when the winters are colder than expected. In 2022, during a particularly warm winter, weather normalization charges made headlines after customers received shockingly high bills that the utility later refunded after the outcry.
PGW also dropped its proposal to apply “revenue normalization,” a potential surcharge to a customer’s bill should the weather normalization charge not be adequate to make up for any unanticipated losses.
“This proposed settlement represents an important step towards a clean energy future for Philadelphia, and it provides critical protections for Philadelphians against increasing energy costs,” said Patrick Houston, with the group Here for Climate Justice.
Patrick Houston, with Here for Climate Justice, speaks Wednesday at a press conference at City Hall. Houston said the settlement with PGW that cuts its planned rate hike by 40% is cause for celebration. (Susan Phillips/WHYY)
Houston praised PGW’s commitment in the settlement agreement to budget $9 million to improve insulation and weatherize low-income customers’ homes in 2026.
“We know that weatherization reduces energy consumption, and reduction in energy consumption also reduces energy costs,” Houston said. “The proposed settlement improves PGW programs that are crucial for low-income residents, like the customer responsibility program.”
The PUC is expected to make a decision on the proposal in November.