DV Journal

You don’t think twice about turning on the tap to get a drink of water or flipping a switch to turn on the lights. But the aging utility system in the Delaware Valley needs constant updates to keep what people take for granted running.

And area companies are stepping up to modernize, rebuild, and improve their infrastructure. That was the theme of a Delaware County Chamber of Commerce breakfast meeting Friday at the Radnor Hotel hosted by chamber President Trish McFarland.

The Philadelphia International Airport is developing a new master plan and, in the coming years, will be rebuilt while remaining in its current footprint, said CEO Atif Saeed.

“For all practical matters, it needs to be rebuilt,” said Saeed. Money for the improvements will come from the airlines and government grants. “It will be a large project. It will be in the billions.”

(From left) Christopher Franklin, Essential chairman and CEO; Mike Innocenzo, PECO president and CEO; Philadelphia International Airport CEO Atif Saeed; Energy Transfer vice president for public affairs Joe McGinn, and Trish McFarland, Delaware County Chamber of Commerce president.

“Two-thirds of the land is in Delaware County,’ he said. “In 2017, a study revealed $53 billion in goods were being transported to our catchment area, and only 9 percent was coming to our (airport). Everything else was going to New York and D.C…Blueberries were flown in from South America and would go to New York and be trucked a mile away from where we were. It’s a huge opportunity.”

They are beefing up the cargo area and services “with the end goal so we can capture more of the cargo. Most of that is going to happen in Delaware County…It will be $1.4 billion of investment expected to generate 6,000 permanent jobs and $1 billion economic impact on an ongoing basis in addition to all the residual impact on businesses in the area…We will need to make some adjustments to I-95 because this will create a lot of traffic that will not be consumed by the roadway system right now.”

“It’s all about the money,” he said. “The 1.4 billion needs to come from somewhere.” He was looking at bonds and private investments and said it “is by far the biggest challenge.”

Joe McGinn, vice president for public affairs and government relations for Energy Transfer, said his company stepped in to meet the area’s needs for natural gas, gasoline, and petroleum products as refineries closed.

“We move about a third of (those products) from a national perspective,” McGinn said. “We’re one of the largest pipeline and midstream companies in the U.S.”

“We’re also, through our history, we have the original refined products transportation system,” he added.

While many area refineries closed, the demand for gasoline and other fuels remained strong.

“How do you get those products here?” McGinn asked. “With our vast infrastructure, one of the things we were able to do is tie in with some of the refineries also in the U.S. Because the alternative is, are we going to get this from Europe or overseas, imported through the region, in the New Y ork Harbor or the Port of Philadelphia? Or can we get this produced domestically and get it here? So, we were able to tie our pipeline infrastructure into the mid-continent, Ohio, Indiana, etc., get that gasoline, and pull it through Pennsylvania to points all across the state.

“We invested billions of dollars in the pipeline infrastructure to bring it here,” he said. McGinn mentioned the Mariner East pipeline, which brings gas from the Marcellus Shale in western Pennsylvania to the area.

“It needed somewhere to go, but obviously, there wasn’t a direct tie to southeastern Pennsylvania,” he said. There is not only demand here but also a “great port.”

Closing the refinery in Marcus Hook, which took up about half its land, left a big hole in the borough’s budget, and the town struggled to make up the property tax revenue. But Energy Transfer’s pipeline project created hundreds of permanent jobs and thousands of construction jobs, he said.

McGinn said, “One of the things I’m proud about is…one of the things we’ve focused on at Energy Transfer and Sunoco is being involved with the local fire companies. It’s mostly volunteers, and they really struggle… We’ve given over $1 million in Pennsylvania in the last five years,” including $10,000 to Brookhaven and $60,000 to Marcus Hook.”

PECO President Mike Innocenzo said the company is creating new infrastructure to meet the needs of residents with the proliferation of electric vehicles and solar roof panels.

“We have an infrastructure that served this county for 140 years that has new demands on it,” said Innocenzo. “We’re doing a lot of upgrades to our system.”

He said it is converting its old system to build more capacity and storm-hardening it. On the natural gas side, it is replacing older pipes, which also helps prevent methane emissions.

He pointed out that the area electric grid narrowly averted brownouts during unusually cold weather last December.

“If we haven’t dug up your street, we’ll probably do it soon,” said Christopher Franklin, chairman and CEO of Essential (AQUA), eliciting chuckles. It tries to coordinate the work with other utilities and the townships. “Nobody wants to see a street dug up this year and again in three years.”

“Street work has continued to be one of our challenges,” he said. Even though Delaware County is the smallest county in Pennsylvania, there are 49 municipalities, “each with an individual responsible for setting fees. So we strategically do work. In some communities, we do the work because they’re welcoming, and in some, we defer a little bit…where people are driving costs.”

“It’s all 100 percent passed on to our customers, so we try to control these costs,” he said. “Long-term affordability of rates…Yes, we have massive infrastructure needs…one of the discussions is spending dollars like inside our family.” They have a safety net for those who can’t afford their water bill.

He also mentioned PFAS, forever chemicals that must be removed from the water by 2027 under a federal mandate of four parts per trillion. companies that produced them should be paying for the clean-up, he said.

And Franklin praised AQUA employees’ fast action, who quickly shut down an intake valve on the Delaware River to prevent a Bucks County company’s chemical spill from getting into the water supply in March.

“The Delaware County Chamber of Commerce has consistently advocated for appropriate support of critical infrastructure as part of the chamber’s legislative agenda,” said McFarland. Infrastructure, such as energy, water, and transit, is paramount to the economic vitality in our region, and the chamber is proud to support the companies who were featured in today’s event.”

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An appeals court ruling has left the construction of a new Delaware County natural gas facility in limbo for months, with no clear sign as to when the project is expected to resume.

PECO Energy Company originally set out to build a natural gas “reliability station” in Marple Township several years ago. The company describes the facility as one that will “enable PECO to distribute more natural gas into Delaware County through 11.5 miles of new natural gas main.”

Company officials argued the station will play a key role in ensuring ample gas supply to Delaware County as demand grows for the key fossil fuel energy source.

Township officials in November 2020 rejected PECO’s application to build the plant, after which PECO filed a petition with the state Public Utility Commission asking for the PUC to exempt the company from township zoning rules.

The PUC subsequently ruled in PECO’s favor. Town officials then appealed to the Commonwealth Court, which halted station construction in March, claiming the commission overlooked several key regulatory considerations when ruling for the energy company.

The court said the commission must “incorporate the results of a constitutionally sound environmental impact review” into a new project analysis.

PECO spokesman Greg Smore confirmed to DVJournal that the case is still waiting to be resolved, having been sent back to the PUC for re-evaluation.

“We are disappointed with the decision,” Smore said. “However, we are evaluating our next steps to complete this project, which is critical to meeting the growing need and demand for safe, reliable, and affordable natural gas for our customers in Marple Township and across Delaware County.”

David Hixson, a spokesman for the PUC, said the case “has been reopened and assigned to the PUC’s Office of Administrative Law Judge for further consideration.”

“If further hearings are scheduled by OALJ, notices will be posted to the public docket,” he added, “but to date, no hearings have been scheduled.”

Officials with Marple Township did not respond to queries asking about the case and the township’s opposition to it. In March, after the appeals court decision, the town said in a statement that it was “pleased and encouraged” by the ruling.

“The township continues to believe that the subject property is not an appropriate site for these facilities,” the town said, “and that this will be borne out by a constitutionally sound environmental impact review by the Commission as required by the Commonwealth Court’s decision.”

For years, a citizen-created initiative, the Marple Safety Coalition, has worked against the plant’s construction. The initiative’s website was last updated shortly after the court decision in early March.

“Probably, [the ruling] means that PECO will not begin building anything soon,” one message reads. “However, they can continue to work at the site; over the winter, there was a lot of activity due to their testing of the pipeline, and that testing will probably continue.” The Marple Safety Coalition did not respond to a query from DVJournal.

Only Texas produces more natural gas than Pennsylvania, which is sitting on billions upon billions of cubic feet of the critical energy source. The U.S. Energy Information Administration says Pennsylvania has 48 underground gas storage sites, “the most for any state.”

PECO says Delaware County’s natural gas consumption is projected to surge in the coming years, necessitating more infrastructure like the reliability plant to ensure demand is met.

“PECO anticipates a 20 percent increase in natural gas usage in Delaware County and a 10 percent increase in Marple Township over the next decade,” the company says on its website.

“Without this project,” the company says, “the natural gas system in this area will be constrained, resulting in inadequate natural gas supply and pressure to help customers run their appliances, like heaters, during the coldest days of the year.”

Earlier this month, Peco’s parent Exelon Corp. completed its split into two companies, putting the Limerick nuclear power plant under its new Constellation brand while keeping Peco and its other utility companies part of Exelon.

Other than a new logo, which Peco rolled out a few weeks ago with a flashy video presentation, what will the changes mean to local ratepayers in the Delaware Valley?

Industry experts say to expect few changes.

“While Peco’s appearance will change over time, we want to ensure our customers know that we are committed to being the trusted energy partner they’ve known for years, and our dedication to the communities we serve will only grow stronger,” said president and CEO Mike Innocenzo. “Our purpose of powering a cleaner and brighter future for our customers and communities remains unchanged, and we’ll continue our efforts to enhance reliability and the customer experience and further our commitment to our communities and to a cleaner energy future.”

Founded in 1881, PECO is Pennsylvania’s largest electric and natural gas utility. With headquarters in Philadelphia, Peco delivers energy to more than 1.6 million electric customers and more than half a million natural gas customers in southeastern Pennsylvania.

According to Terrance J. Fitzpatrick, President and CEO of the Energy Association of Pennsylvania, Exelon’s move is part of a “trend in the industry for 20 years to separate the transmission and distribution business from the generation business into separate companies. In fact, Peco/Exelon is the last electric utility in Pennsylvania to do so.”

And what about rates?

“Separating our companies will not change rates for customers,” Peco said in a statement. Fitzpatrick agrees.

“It doesn’t seem to me that the corporate separation should raise concern for consumers,” Fitzpatrick said. “Customers can choose to purchase supplies of electricity or gas from competitive suppliers or they can choose the supply option of the utilities. The manner that electric and gas utilities buy supplies in wholesale markets for their customers who choose to buy from them is overseen by the Pennsylvania Public Utility Commission (PUC). The utilities do not make a profit on these sales—they simply pass along the cost to customers.”

David N. Taylor, President and CEO of the Pennsylvania Manufacturers’ Association, says it’s up to the PUC to ensure ratepayers are protected.

“One of the great accomplishments of the [Republican Gov. Tom] Ridge administration was transitioning Pennsylvania from being a regulated market for electricity to being a competitive market,” Taylor said. “As part of that, Pennsylvania went through a long and very expensive transition process. Part of that was you had nuclear power plants that were governed as utilities to say, ‘Look, our business model is predicated on the PUC approving future rate increases which made all these capital investments that we need to be able to recoup, that it’s not right for the commonwealth to go and pull the rug out from under us.'”

The people who were proposing the shift to competitive markets agreed, and during the transition, nuclear power generators were allowed to impose a surcharge on customers totaling $9 billion.

“That was a price that Pennsylvanians paid to get competitive markets,” says Taylor. “The nukes wanted competitive markets, they lobbied for it because they thought they were going to inherit the earth as the low-cost baseload provider, but this was before the Marcellus Shale was discovered and developed. And so the nuclear companies took all that money and apparently just pocketed it or gave it to the shareholders. They didn’t do anything to prepare for competition, and then market conditions changed.”

As a result, Exelon reversed its position, Taylor said.

“You had Exelon, which is the owner of several nuclear power plants, working against competitive markets, and by the way, they were going to keep the $9 billion.”

As someone representing the manufacturing sector and large industrial energy consumers, Taylor says they were “deeply displeased.”

Today, competitive markets will continue to protect consumers by applying downward pressure on prices.

“Any changes to Peco rates will follow the standard process for regulatory rate reviews, which follow PUC guidelines, and include comprehensive input from customers and stakeholders,” the company said.

“This is an important milestone in Exelon’s history,” Christopher M. Crane, president and CEO of Exelon, said in a statement. “With the successful completion of our separation, we step forward in a strong position to serve customer needs, drive growth and social equity in the communities we serve and deliver sustainable value as our industry continues to evolve.”

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