In 2014, a long debate about Philadelphia Gas Works—as long as one century and a half—came to a head. The mayor, Michael Nutter, wanted to sell the public utility; a private company wanted to buy; but the City Council blocked the move. When the deal died, Nutter voiced his frustration, calling the council’s move a “big mistake” and a “massive failure in leadership.” “The citizens of our city, the customers of PGW, and our own city workers will feel the negative effects of this terrible indecision for years to come,” he said.
Nearly one decade later, after the second hottest summer in the history of Philadelphia, PGW is still controversial. It remains a creature of its political past. On the cusp of a new mayoral election, candidate and former Councilmember At-Large Derek Green, and presumptive candidate City Controller Rebecca Rhynhart, have served on the Gas Commission, which oversees PGW and its troubled legacy.
Since the 1835 founding of PGW, one of the earliest gas utilities in the United States, Philadelphians have been unable to agree on its proper management. In 1841, the city assumed control of the company, which became a source for patronage and kickbacks. By the 1880s, municipal mismanagement—and corruption scandals—left the city’s gaslight service in debt, disrepair, and disarray, with high prices for customers. Many urban reformers advocated for leasing or selling the utility.
In 1897, City Hall agreed to lease PGW to Pennsylvania-based United Gas Improvement Company for thirty years, with possibilities for ten-year renewals. The deal proved to be controversial in its own right, for UGI was not the lowest bidder. Despite this initial cloud of impropriety, UGI went on to successfully manage PGW, and secured a second lease with the City Council. However, when a third lease was being finalized, Philadelphia mayor S. Davis Wilson tried to seize control of the city’s gas facilities. When the dust settled in 1938, the state Supreme Court had affirmed UGI’s contract.
It wasn’t until the beginning of Frank Rizzo’s mayorship, in 1972, that City Hall decided not to renew UGI’s management. With the transition back to municipal control came a return to patronage, with accompanying clouds of impropriety. Infamously, in the 1980s, PGW hired the pensioned ex-mayor Rizzo as a well-paid security consultant. Other scandals in the late twentieth century led to high-level resignations at the utility, and criminal charges against PGW executives.
Under mayors Ed Rendell and Michael Nutter, City Hall warmed up to selling off PGW. Before the City Council killed the deal in 2014, UIL Holding Company of Connecticut had rights to purchase the utility for $1.86 billion. That might have been Philadelphia’s last good chance to privatize PGW.
In the time since Nutter—the mayor who also founded the Office of Sustainability—the urgency of decarbonization has increased greatly, presenting a massive challenge to city leadership. PGW needs to make money on natural gas while moving away from natural gas. The current lame duck mayor, Jim Kenney, has announced a city-wide goal of net-zero by 2050, but has otherwise shown little inclination to rock PGW’s boat.
Here’s the billion-dollar question: Can a cash-strapped city with a low tax base succeed in transitioning its utility from fossil fuel to cleaner sources of energy (e.g., renewable natural gas, hydrogen, geothermal, electrification), all the while delivering a dependable and affordable service to a customer population with high rates of poverty and precarity? Candidates in the upcoming 2023 mayoral election must confront this complex issue directly. PGW has signaled a commitment to diversification in a recent report. Getting there is another thing.
Given the history of PGW, and the legacy of its political culture, guiding the utility into a low-carbon future will take an incredible mayor who can work in concert with the City Council and the Gas Commission—the kind of leader Philadelphia has not seen in a long, long time.