Gas Commission gives PGW go-ahead for natural-gas cars

Posted: June 13, 2013

A city panel Tuesday approved a Philadelphia Gas Works request to buy 24 natural-gas vehicles, even though the utility acknowledges it would cost less to buy conventional gasoline cars.

The Philadelphia Gas Commission voted to tack $438,000 onto the utility's $3.1 million budget next year for new vehicles to pay for the higher cost of the sedans, along with a compressed-natural-gas fueling station.

Despite a huge price advantage, natural gas is only slowly moving into the motor-fuel market because of high up-front costs. Even the city's natural-gas utility had to struggle to make a case for switching some of its fleet to CNG.

The measure, which still requires City Council approval, was dramatically scaled back from PGW's initial $1.9 million proposal, which the utility admitted was "less than compelling" economically. But PGW wants to switch over some cars to market CNG to fleet owners.

"A potential PGW fleet conversion will play a key role in the development of this market," Douglas A. Moser, an executive vice president, said in a letter to the Gas Commission.

The commission's staff said that even with cheaper fuel costs, the 24 CNG vehicles will cost $227,139 more to operate over seven years than conventional cars.

"I don't see how this passed the cost-benefit analysis," said Robert W. Ballenger, a Community Legal Services lawyer who acts as the city's public advocate. He urged the Gas Commission to reject the proposal.

The natural-gas industry, which is producing an abundance of fuel from domestic sources such as Pennsylvania's Marcellus Shale, is eager to promote natural-gas vehicles. CNG also produces less pollution than petroleum-based fuels, appealing for cities like Philadelphia, where the air quality does not comply with federal clean-air standards.

And PGW is hungry to build up new markets for natural gas because its customer base is static and buying less gas each year as homeowners replace old furnaces with more efficient equipment.

PGW is not an optimal buyer of CNG vehicles, which are better suited to owners of vehicles that consume large amounts of fuel, such as fleets of buses, trash trucks, or tractor-trailers.

PGW's cars are driven less than 8,000 miles a year, a rate at which it is difficult to accumulate sufficient savings to pay for a sedan's $12,560 in higher costs, plus the $137,000 cost for installing a slow-fill fuel station at the utility's Montgomery Avenue headquarters.

The plan is not an "easy fit" for a traditional cost-benefit analysis, PGW said.

"The true economic return of this initiative to PGW and our customers will be determined in the longer term by the added load generated from other fleets that will convert vehicles or some portion of their fleet to CNG," wrote Andre C. Dasent, a lawyer for the utility.

The measure, which the five-member Gas Commission approved unanimously, requires Council approval because it involves a change in PGW's capital budget.

Contact Andrew Maykuth

at, 215-854-2947 or @Maykuth

on Twitter.

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