PGW 101: Could it, sale or not, help turn Philly into an 'energy hub'?

Could the aging Philadelphia Gas Works really help the city turn into an “energy hub”? That’s the promise from Mayor Michael Nutter and his allies on the Chamber of Commerce, who’d like this city to join Houston, the Gulf Coast and even western Pennsylvania in luring jobs and money here.

And that conversation has been reignited as the city holds hearings this week related to the future of PGW, the city-owned gas utility company that the Nutter administration wanted to privatize. City Council didn’t.

Here’s why everyone’s all hot and bothered about energy allasudden.

“Philly” and “energy” in the same sentence. Is this even realistic?

That’s up for debate. Many in the business and corporate communities have dreams of Philadelphia creating, refining and transporting energy to supply much of the Eastern seaboard. Others aren’t so sure that’s a realistic goal, especially for a city that hasn’t done so in recent history.

Michael Krancer, Energy Industry lead at Blank Rome, LLP and former Secretary of the Pennsylvania Department of Environmental Protection, believes that Philadelphia can become not only the energy center of the northeast, but of the country, saying it could one day surpass even Houston’s energy dominance.

He said if Philadelphia can work to tap into the Marcellus Shale-rich western part of the state, the relationship can work like “a Nick Foles handoff to LeSean McCoy, it’s perfect teamwork.” (Sorry, Mark Sanchez.)

“We of course are prime location and we’re close to the resource, whether it’s natural gas, methane or natural gas liquid,” he said. “We have world-class transportation facilities, world-class ports, a world-class work force, world-class educational institutions, and we have an industrial base that used to be great but has waned.”

Becoming an energy hub would be a huge undertaking for the city. It would be bolstered significantly by the natural gas business and would benefit from how close Philly is to the Marcellus Shale (should drilling companies install some heavy duty pipelines through the state). Other ways the city’s proposed development would be through the creation of a huge facility to export liquid natural gas — envision giant storage tanks along the Delaware.

Pipelines? Giant storage tanks? Won’t all this be bad for the environment?

That, too, is up for debate. The guys behind the energy business are of course defending their practices and saying there’s little chance of large environmental impact.

“Some folks are opposed to fossil fuels, and they’re going to live in their dream world,” Krancer said. “But we need to turn on our lights, fill our cars and power our medical institutions. All those things that keep us alive.”

Environmentalists, especially those concerned with the proliferation of fracking, disagree. (Remember: Fracking is the fairly new process that’s used to fracture the Marcellus Shale rock in order to extract natural gas. Some say it’s harmful to the water supply in surrounding areas.)

Philadelphia environmental groups released a letter this week in response to a report drafted for City Council that outlines propositions for how the city can become an energy hub. In the letter, the groups said they were concerned that proposed infrastructure changes to pipelines and natural gas could be bad for Philadelphia environmentally and economically.

“The vision of Philadelphia as an energy hub is scaling up big hazards, so increasing pollution in our city, and that’s mainly air pollution, but it’s also potentially water pollution,” said Sam Bernhardt, senior Pennsylvania organizer for Food and Water Watch. “These trains are literally going over the Schuylkill River, which provides a lot of drinking water for a lot of Philadelphians.”

Bernhardt also said some environmental groups have concerns about the fiscal sustainability of some of the city’s potential investments. He likened the decision-making to Harrisburg’s incinerator deal that failed miserably. You can read more about that mess here.

What’s all this have to do with selling the PGW? Also I thought that wasn’t happening…?

So a bunch of the suggestions being handed to the Philadelphia city government about how to become this energy hub have come from a report recently released by Concentric Energy Advisors, consultants hired by council for advice on how to move forward, especially with regard to PGW. You can read that full report here.

In case you missed it, Mayor Michael Nutter’s administration spent the last two years looking for a private buyer to purchase PGW, to get it out of the city’s hair (and to make some cash to help out with the pension fund for the city’s 65,000 workers — it’s $5 billion in the hole. With a B.) . The Connecticut-based UIL Holdings offered nearly $2 billion to buy PGW, and the income would have gone to help the city’s financially ailing pension fund. Aaaaaand then City Council killed the deal without public hearings and little explanation.

Environmental groups said they were glad — privatizing PGW would have taken away local control of the gas utility. Corporate energy supporters were largely in favor of the privatization, and some called the move to kill the deal a setback.

“Council reacted to the substance of the deal,” Jane Roh, spokeswoman for Council President Darrell Clarke, said. “But the substance was a product of a process that did not include Council’s input. Had Council’s input been included from the beginning, the final product – a deal for sale or something else – would not have been found so lacking by Council.”

Mayor Nutter was frustrated, to say the least. He circulated “myths” about the deal. Then, council rebutted those myths. So now, hearings will be held in Philly over the next two days to discuss how the city can still become that energy hub that it wants to be.

Sounds like a lot of dysfunction. Are we sure the city’s ready for this?

Yeah, so we’re not really sure. The Daily News posed this question in an editorial earlier this week, writing that they’re concerned council isn’t ready to fully explore making Philadelphia a center for energy development, since who owns PGW is kind of important.

UIL Holdings still wants PGW. Nutter still wants them to have it. Council feels left out. And there’s some consensus that these issues have to be resolved before the city moves forward with its loose vision of being that energy hub.