If permitted, this provides PGW with the ability to suspend the supply of gas to Vicinity at any time, which would interrupt the co-generation of electricity and steam in its plant. In addition to the dramatic price increase, PGW’s new offer also migrates Vicinity from firm gas delivery to interruptible supply. In its formal complaint to the PUC, Vicinity contests the drastic increase in the cost to transport gas through PGW’s pipeline and claims it is anti-competitive, unreasonable and an attempt to impose significant anti-competitive pressure on Vicinity’s mission critical energy services business. PGW has provided Vicinity with firm supply since the current contract was first signed in 1996. Because the steam is a by-product of the CHP process, it is a clean, low carbon, and efficient alternative to directly consuming gas on site in individual buildings. This steam is distributed to customers throughout the city through a vast network of underground pipes and is used to heat and cool buildings, as well as for critical processes and sterilization of lab and surgical equipment in hospitals, bio-medical and life science laboratories, and other facilities. Vicinity Energy is PGW’s largest customer and consumes this gas to generate both electricity, which is supplied to the PJM electric grid, and a by-product thermal heat in the form of steam. Per the longstanding contract, PGW supplies gas transportation services to Vicinity’s Grays Ferry combined heat and power (CHP) plant in South Philadelphia Vicinity purchases the natural gas itself from third party natural gas suppliers. In February 2021, PGW provided Vicinity with a new offer to continue gas supply to its Grays Ferry plant starting in 2023, which increases the price for gas supply to Vicinity by over 1000%. The existing contract between Vicinity and PGW, which was originally executed in 1996 and expires at the end of 2022, has helped to ensure that Vicinity’s customers, representing approximately 100 million square feet of building space (75 million square feet of heating and 25 million square feet of summer cooling) in city center Philadelphia, continue to receive clean, reliable, and affordable steam service. 25, 2021 (GLOBE NEWSWIRE) - Vicinity Energy, owner of the nation’s largest portfolio of district energy systems, announces today that it has filed a formal complaint with the Pennsylvania Public Utility Commission (PUC) regarding the renewal of its gas transportation contract with Philadelphia Gas Works (PGW).
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