Penn's energy supplier issues formal complaint against Philadelphia Gas Works

Vicinity Energy, which supplies energy to Penn and other institutions in Center City, released a formal complaint against the city-owned energy company Philadelphia Gas Works on Oct. 22, accusing it of engaging in anti-competitive and predatory tactics.

The complaint was issued in response to PGW proposing a price increase that would raise the price supplied to Vicinity's plant in Grays Ferry by over 1000% starting in 2023, which is when the contract between Vicinity Energy and PGW ends, according to the South Philly Review.

Vicinity owns the system that provides steam heat to the University, residential and office buildings in Center City, and public institutions like the Philadelphia Museum of Art and Thomas Jefferson University. About 53% of the steam that Vicinity produces is sold to Penn. The new deal would force Vicinity to raise steam rates for these institutions, The Philadelphia Inquirer reported.

In a written statement to the Inquirer, PGW said that Vicinity pays "roughly 1/10th of the rate that PGW’s next lowest-priced customer pays" and that it is not fair to PGW’s customers to continue to pay for the deal enacted in 1996.

While PGW is seeking to dramatically raise Vicinity’s rates, the complaint also alleges that PGW is attempting to unfairly acquire more steam-loop customers by giving away boiler plants and offering extremely low deals, the Inquirer reported.

As part of the 1996 agreement, PGW supplies gas transportation to Vicinity’s Grays Ferry plant, and Vicinity purchases the gas from third party natural gas suppliers. The gas is used to generate electricity, and the by-product of thermal heat in the form of steam is used to heat and cool buildings. This serves as a clean, low-carbon alternative to direct gas consumption, the South Philly Review reported.

According to South Philly Review, Vicinity estimates that its operations avoid over 300,000 tons of carbon dioxide emissions annually compared to on-site gas boilers and electric consumption from the electric grid. Vicinity has stated that the company is committed to further investing in green alternatives and reaching zero net carbon emissions by 2050.

Bill DiCroce, Vicinity's chief executive, told the Inquirer that the company offered to buy the pipeline from PGW, but this offer was declined. If the companies cannot come to an agreement, DiCroce told the Inquirer that Vicinity would consider building its own pipeline to bypass PGW, the Inquirer reported.