Emails about PGW’s role in ‘energy choice’ bill pit Councilmember Gym against utility’s CEO

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Philadelphia Gas Works at 1601 S. Broad Street. (Nathaniel Hamilton for WHYY)

Philadelphia Gas Works at 1601 S. Broad Street. (Nathaniel Hamilton for WHYY)

Philadelphia City Councilmember Helen Gym strongly urged Philadelphia Gas Works’ new CEO, Seth Shapiro, last week to disavow the utility’s support for a controversial state bill that would prevent the city from ever passing legislation limiting the use of fossil fuels.

Gym also told Shapiro that PGW should cut its ties with industry groups, whose work she said would thwart the city’s climate goals.

The exchange came during last Wednesday’s council hearing recommending ways PGW could move away from solely providing natural gas and shift some of its business to renewables such as geothermal energy.

Shapiro appeared at the hearing before the Joint Committee on Finance and Transportation and Public Utilities to testify about the 81-page PGW Business Diversification Study released in December. The study tries to tackle the difficult question of how Philadelphia can meet its climate goals while owning a fossil fuel company that provides heating and cooking gas to 500,000 city residents.

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Under sharp questioning by Gym, Shapiro denied PGW had a role in crafting the bill that could limit the city’s ability to reach its larger climate goal of becoming carbon neutral by 2050. Gym repeatedly referred to reporting by WHYY News that revealed emails showing PGW executives engaged in communication with industry lobbyists and lawmakers about the language of the bill. In April 2021, City Council had passed a resolution opposing the measure, Senate Bill 275.

PGW executives would not speak directly to WHYY News for the original story about the emails and provided only written answers to questions. Last Wednesday’s City Council hearing was the first time Shapiro spoke publicly about the issue.

PGW’s role in SB 275

Some of the language suggestions put forth by PGW executives made it into the final version of Senate Bill 275, and would strengthen it by adding to the list of fuel sources municipalities cannot limit. SB 275, like a similar State House measure, aims to prevent individual municipalities from either encouraging or requiring electrification of heating, something climate scientists and advocates say is essential to reducing greenhouse gas emissions. The measure is known as a “preemption” bill because it would preempt the city from enacting its own laws, something the city of Philadelphia outright opposes.

PGW’s official position on the bill is that it was “neutral.”

But Councilmember Gym told Shapiro that PGW can’t be neutral and at the same time be in line with the city and its climate goals.

“It’s not enough to say that it’s OK for you to be neutral on legislation when you had such a strong hand, apparently, in crafting it and maybe even making it stronger,” she said. “I think it’s important with new leadership at PGW for you to take a stand against SB 275 and keep our public utility in line with the mission, the goals, and the stands of the city of Philadelphia.”

Gym questioned that official stance of neutrality, telling Shapiro that the bill is “antithetical” to both the city’s and PGW’s missions, and that the two should be on the same page.

“You had a role to play in the legislation,” she said.

Shapiro attempted to defend PGW’s actions without always directly answering her questions. He said the emails showed no “lobbying” occurred.

“It is not my job, and it is not my coworkers’ job, to be for or against legislation necessarily,” Shapiro said. “I hear you say I should have come out against it or we should have come out against it.”

Gym pressed Shapiro by asking if PGW played an “active role in the crafting of SB 275?”

“So I would have said your language of saying we had a strong role,” said Shapiro. “I mean, you’ve seen the emails, I’ve seen the emails … in email after email, our vice president of government affairs says PGW is neutral.”

Dubbed “energy choice” legislation, the effort to craft a bill in Pennsylvania stemmed from the natural gas industry’s pushback on local governments’ climate efforts, specifically enactment of a Berkeley, California, law in 2019 that bans new natural gas hookups in some buildings.

In just one email, dated Jan. 8, 2021, then-PGW vice president of government and regulatory affairs Greg Stunder writes to inform Peter Trufahnestock of Columbia Gas of Pennsylvania and Maryland that PGW will be neutral.  “Pete, have you seen Sunset Boulevard?” asks Stunder in the email. “Also, on another note, I confirmed this afternoon that we’ll be neutral on energy choice. I’ll call Alisa on Monday. Best, Greg.”

Stunder was referring to Alisa Harris, a lobbyist for UGI Utilities, a natural gas company based in Valley Forge.

The content of the PGW emails discussing Senate Bill 275 was released as part of a Right to Know case brought by Charlie Spatz of the Climate Investigations Center. The state Office of Open Records forced PGW to make the records public after Spatz sued.

The bill, spearheaded by gas industry lobbyists and sponsored by State Sen. Gene Yaw (R-Lycoming), would block municipalities from limiting fossil fuel use and promoting electrification — potentially undermining the city’s own climate goals and those representatives tasked with coming up with solutions, including members of City Council, the city’s Office of Sustainability, and even the Philadelphia Gas Commission, which approves PGW’s budget.

SB 275 has since passed the Senate with a veto-proof majority, but the House version, HB 1947, passed with enough opposition from Democrats to maintain a veto by Gov. Tom Wolf.

The city says that it has no plans to follow in Berkeley’s footsteps and ban natural gas, and that is not a proposal in the PGW Diversification Study, the subject of last Wednesday’s hearing.

The meaning of ‘energy choice’

Some say “energy choice” is a misnomer when it comes to the bill.

“It should be called the ‘limiting energy choice’ bill,” said David Hess, a retired lobbyist who headed the Department of Environmental Protection under former Gov. Tom Ridge. “They want to get out ahead of what they view as any limits on their ability to expand their natural gas service in the state, and that’s what this bill really does. It limits the ability of a community to choose only clean energy.”

Prior to Gym’s questioning last Wednesday, Shapiro acknowledged the existential crisis brought by climate change, but said natural gas will continue to be a primary generator of electricity for decades to come. Those statements, combined with the content of the emails and PGW’s support for the goals of the legislation, have led some to question PGW’s commitment to any type of decarbonization.

Shapiro said the emails did not show any support beyond a neutral stance. But he also expressed support for the measure, which he referred to as “energy choice” under questioning by Councilmember Cindy Bass.

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“We are extremely concerned about the catastrophic impact that limiting energy choice would have on our customers and the huge economic burden it would place on the finances of the city of Philadelphia,” Shapiro said.

The concern is that some customers would stop heating their homes with gas and shift to electricity, creating a situation in which the only customers left would be those less capable of paying their gas bills. The diversification study was aimed at exploring ways for PGW to decarbonize while also maintaining affordability and its union workforce.

Shapiro downplayed the emails about the legislation, pointing to the number of records released. (It is not unusual for a Right to Know request, which asks for records that contain key words, to generate abundant documents.)

“There are a couple emails, and understand this was a Right to Know request which was voluminous, I mean, pages upon pages and pages,” he said. “None of which had anything to do with us opining on this, most of which were all the investor-owned utilities commenting. And everyone’s pointing to a single or two emails from one of our employees saying, `Hey, when you’re describing energy, why don’t you describe it in these ways?’ Right?”

Shapiro appeared to be referring to several email exchanges in which Greg Stunder, who retired from PGW in December, discussed the language of the proposal with industry lobbyists and Senator Yaw’s chief of staff.

What’s in the emails

Before the proposed legislation was introduced, strings of emails obtained by WHYY News show gas industry lobbyists working early in 2021 with one another and Yaw’s office to craft the bill. And while UGI  Utilities representatives took the lead, PGW’s Stunder was an active participant.

On several occasions, the emails show, Stunder suggests changes to the language that would strengthen the legislation, taking his cue from a Florida bill to expand the definition of “utility service” to include “electric, manufactured gas, liquefied petroleum gas, natural gas, hydrogen, fuel oil, a renewable source, or any other source from a utility service provider that is capable and authorized to provide utility service for the property of the individual or entity.”

A February 2021 investigation by NPR showed how trade groups in which PGW maintains membership have been working against efforts by municipalities to tackle climate change through electrification. The industry has worked with Republican lawmakers in 23 states to introduce “preemption” bills, which it has labeled “energy choice” legislation, that would forbid local governments from enacting measures that would discourage fossil fuel use and encourage electrification.

Shapiro said the emails show only subject-matter experts answering questions from state lawmakers.

“It’s our job to know how various bills impact us,” he said. “… OK, we are not in favor of preemption if you want me to issue a public statement that says, `I, Seth Shapiro, I’m not in favor of anyone preempting the rights of Philadelphia to govern.’”

On ‘neutrality’

Councilmember Gym questioned PGW’s commitment to “neutrality” and Shapiro’s assertion that suggesting definitional language for a piece of legislation is simply answering questions as a “subject-matter expert.”

“So, definitions do matter,” Gym said. “The feedback matters, and claiming neutrality … or not lobbying for a bill that you provided line edits for is a problem.”

“We did not provide line edits,” Shapiro responded.

The string of emails obtained by WHYY also shows PGW’s Stunder cc’d on communications of support with Senator Yaw’s aide Nick Troutman.

In a Jan. 19, 2021, email sent by UGI lobbyist Alisa Harris to Troutman, Harris indicates unanimous support among the natural gas distribution companies (NGDCs).

“I met with the other NGDCs (copied) on Friday and everyone is eager to move forward,” Harris wrote. “We spent a good deal of time discussing the benefits of a fuel neutral bill. That being the case we will develop a strategy that supports that approach.”

The email continues, suggesting that the bill be expanded beyond new construction. “We are ready to follow your lead. If you think it is appropriate, the NGDC would like to schedule a call with you to discuss how we can best support this effort. Like before, we are happy to make calls and solicit sponsors for the bill.”

At the time WHYY was reporting its articles on the emails last year, PGW would not answer questions regarding whether Stunder at any time made it clear that the city-owned utility was neutral on the effort indicated by Harris as unanimous.

Neither would PGW answer questions about whether anyone from the utility or its representatives made efforts to support or encourage others to support the bill, as referenced in the email.

On lobbying

At last week’s City Council hearing, Shapiro kept bringing the conversation back to having not lobbied for the bill. And while the actions may not be the legal definition of lobbying, critics say it’s a red herring, when the emails show active participation in crafting a bill that runs counter to Philadelphia policies.

Lobbying requires an effort to persuade, and providing advice to a legislative or government official is not necessarily lobbying. The emails in question, however, refer to a time before the legislation was even introduced, and again, suggested additional language.

“Our employees were in communication with legislative staff or with legislators,” Shapiro said. “They were in a dialogue with dozens of other energy industry … and these are dialogues that cover a whole host of topics. So to say that one of [Stunder’s] peers asked him what he thinks the definition of energy should be and for him to comment, I just think it’s a stretch to call it lobbying. I’m sorry, I just do.”

Shapiro told Gym it was his duty as a public servant to respond to questions.

“If a senator from some other parts of the state calls me and asks me a question for which I am a subject-matter expert, I believe I’m obligated to give them a response,” he said.

Gym pushed back.

“I consider it a problem,” she said. “I believe policies need to change at PGW on that particular issue, and I do think that while I recognize … the benefits from the American Gas Association, their work also works to undermine many of the goals that Philadelphia has. I believe that you should cut ties, and that we should work together.”

Gym added that the dues paid to the American Gas Association could be better spent.

“We are deeply invested in individuals who conduct these studies, and we would like to see $445,000 from PGW go into subject-matter experts who can bring PGW the kind of vision that it needs to be a thriving, strong public [utility],” Gym said.

Gym also asked whether PGW officials were in communication with the American Gas Association over SB 275. Shapiro said he wasn’t “aware of any conversations” between PGW staff and the industry group regarding SB 275.

But on Feb. 5, 2021, PGW’s Greg Stunder sent an email to the AGA’s Daniel Lapato, asking about the legislation. He references National Fuel lobbyist Ed Damico.

“Hi Dan, hope you’re doing well,” wrote Stunder in the email. “I’m doing ok. Been discussing energy choice with Ed Damico and others — he mentioned that he spoke to you. Has NARUC [National Association of Regulatory Utility Commissioners] or any state PUCs [Public Utility Commissions] supported energy choice legislation? Thanks, Greg.”

Lapato responded about 10 minutes later.

“Greg, good to hear from you! Yes, the Kansas Commerce Commission (KCC) was “neutral” but if you hear their testimony is (sic) was supportive. And the Arkansas PUC chair testified in favor. It was really good!”

Stunder replied: “Thanks so much Dan. Have a good weekend.”

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Disclosure: WHYY CEO Bill Marrazzo is on the board of UGI Utilities.

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