Vicinity Press Release
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). 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. 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%.
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. 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. 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. 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.