Philly's Gas Utility is Fighting the City on Climate Policy - Sludge

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In 2018, Philadelphia laid out an ambitious plan to cut citywide carbon pollution 80 percent by 2050. To hit that goal, the city would need to change the way it heated buildings — using electric heat pumps, for instance, instead of burning natural gas.

The shift toward electric heaters away from natural gas would mean less revenue for Philadelphia Gas Works, the largest city-owned gas utility in the country, which employs some 1600 people. To help Philadelphia Gas Works through this transition, the city has undertaken a study to find ways that the utility can diversify its business, so it may continue to thrive even as Philadelphia weans off natural gas.

Despite being owned by the city, Philadelphia Gas Works has sided with the gas industry against proposals that would help Philadelphia achieve its carbon-cutting goals. Documents obtained through a public records request show that Philadelphia Gas Works fought building codes that would curb the use of gas and devoted ratepayer dollars to trade groups opposing electrification.

In 2019, Philadelphia Gas Works paid the American Gas Association $421,979 in member dues and paid the American Public Gas Association $56,000 — money that came from Philadelphia ratepayers. Both groups are fighting efforts to curb the use of natural gas, according to recent reports.

“When you pay your gas bill in Philadelphia, Philadelphia Gas Works is taking that money and spending it on dues for groups like the American Public Gas Association and the American Gas Association, which are then doing things to fight against electrification,” said Charlie Spatz, a researcher at the Climate Investigations Center, which obtained the documents. “The gas utility is pretty at odds with the actual policies of the mayor’s office and the city council.”

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This tension is most evident with building codes. Every three years, the nonprofit International Code Council produces building codes that are widely adopted by state and local governments. Those codes are voted on by representatives from government and industry. In 2019, Philadelphia Gas Works sent 12 representatives to vote on a new slate of energy conservation codes. They outnumbered the nine voters representing the city of Philadelphia and the Philadelphia Office of Sustainability.

Philadelphia Gas Works urged its representatives to vote down cleaner building codes. In a November 2019 email, Gregory Stunder, Philadelphia Gas Works’s vice president of regulatory and legislative affairs, distributed voting guidance from the American Gas Association to the utility’s voting representatives.

Stunder wrote, “PGW is asking you to vote according to the attached recommendation list developed in coordination with the American Gas Association (AGA) and the National Association of Homebuilders (NAHB). These are the critical issues identified that require action by the gas industry.”

The American Gas Association recommended voting against several measures that would curtail the use of natural gas in buildings. One such measure would encourage the use of more efficient water heaters in new homes. Another would outfit new homes with the wiring needed to replace gas appliances with electric appliances.

A spokesperson for Philadelphia Gas Works defended the email directing its representatives on how to vote by saying, “we take seriously our responsibility of balancing the best interests of our customers, the needs of the city and our commitment to sustainability and the environment. In this case, we believe the AGA’s guidance appropriately balanced those priorities.”

This would put Philadelphia Gas Works at odds with local officials. A spokesperson for the city of Philadelphia said “the Office of Sustainability voted for all code changes that would support increased energy efficiency and adoption of renewables or otherwise support our climate goals.”

Despite opposition from industry groups, both measures won more votes. However, the American Gas Association and other groups later appealed to the International Code Council to overrule voters on these measures. In both cases, the International Code Council ultimately sided with the American Gas Association. Neither measure will be included in the updated building codes. The development comes as a blow to electrification efforts.

“If you have an all-electric home, anytime that the grid that you’re connected to gets cleaner, essentially every electric system in your home gets cleaner too,” said Lauren Urbanek, senior energy policy advocate at the Natural Resources Defense Council. “It makes the most sense to do it during construction, rather than having to go back and retrofit and make some very big and disruptive changes to the electrical system of a home.”

Industry groups triumphed not just in the International Code Council appeals process but in revising how building codes are made. The International Code Council now is adopting a new system in which local governments will no longer be able to vote on future energy-efficiency codes, HuffPost reported. Codes will be drawn up by committees that give industry groups greater sway over the process. The American Gas Association said it supports the changes.

In addition to opposing cleaner building standards, the American Gas Association is also supporting so-called “preemption” bills that would prevent local elected officials from curbing the use of natural gas, an NPR investigation found. Dozens of cities, mostly in California, have already passed measures limiting the use of natural gas in new buildings, spurring a wave of preemption bills.

In a 2020 presentation, the American Gas Association listed ”preemptive legislation” among its initiatives. Arizona, Louisiana, Oklahoma and Tennessee have all already passed such laws.

Strikingly similar preemption bills have been introduced in Arkansas, Colorado, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, North Carolina, Texas, Utah, and recently, Pennsylvania. Philadelphia Gas Works has partially denied a public records request for emails related to Pennsylvania’s preemption bill.

A spokesperson for the city of Philadelphia said the city “has and will always oppose attempts to preempt local governments from making crucial governing decisions to protect their residents.” With the American Gas Association supporting preemption bills, the Center for Biological Diversity is petitioning federal regulators to prevent utilities from sending ratepayers dollars to trade groups.

Natural gas is a major driver of climate change, which is already fueling more extreme heat and severe storms in Philadelphia. While the power sector as a whole is expected to use less natural gas in the years ahead, demand from buildings is expected to rise. Buildings account for around 12 percent of U.S. carbon pollution. Multiple independent analyses show that, to rein in climate change, homeowners will need to replace gas-powered appliances with electric appliances powered by clean energy.

Jeremy Deaton writes for Nexus Media, a nonprofit climate change news service. You can follow him @deaton_jeremy.