The proposed settlement agreement contains important steps toward a clean energy future for Philadelphia and provides critical protections for Philadelphians against increasing energy costs.
The coalition of community groups, which goes by “Energy Justice Advocates,” consists of POWER Interfaith, Sierra Club Pennsylvania, Physicians for Social Responsibility Pennsylvania, Clean Air Council, Vote Solar, PennEnvironment, and PennPIRG, and was represented by Earthjustice.
The proposed settlement, which is still pending approval by the Pennsylvania Public Utility Commission.
The proposed settlement would bring down PGW’s $105 million yearly rate increase proposal to $62 million–- a reduction of more than 40%.
This decrease means that PGW will be recovering less through customer bills, resulting in a smaller bill increase than proposed.
PGW’s original ask would have resulted in a 13% increase that would have raised average annual residential bills by $173.
The settlement also brings the Residential Customer Charge down to $17.25, instead of PGW’s original proposal of $19.50.
The new $62 million rate increase is set to be effective on or after November 28, 2025.
The settlement agreement would both limit and eliminate specific bill surcharges for PGW that would fall on its customers.
It would completely remove PGW's proposed revenue guarantee, which would have forced customers to pay more if PGW's annual revenue falls short of expectations.
Revenues have been declining due to both energy efficiency and electrification, and this surcharge would have been a bandaid, instead of addressing fundamental challenges to PGW’s business model.
Weather Surcharge
The agreement also places limits on an existing surcharge which adds charges to customer bills when warmer than expected weather means customers use less gas.
PGW also agreed to revisit how it calculates "normal" weather given recent history of warmer winters in Philadelphia.
This settlement agreement also would include improvements to PGW’s Customer Responsibility Program, and an increase to PGW’s Low Income Usage Reduction Program (“LIURP”) budget to $9 million in 2026.
This program would help weatherize more homes for low-income customers.
Greenhouse Gas Reductions
Notably, the settlement agreement also creates a community engagement process between PGW and the public regarding planning for long-term greenhouse gas emission reductions in Philadelphia, providing the first-ever dedicated meetings for public participation in such planning.
This agreement to meet with the community to talk about climate solutions represents a critical step towards a sustainable clean energy future for Philadelphia, including meeting the City’s goal of net zero greenhouse gas emissions by 2050.
The community engagement process created by the settlement agreement is essential to that end, because to protect the most vulnerable Philadelphians from the worst effects of climate change, we need everyone’s contributions.
Statements from the Energy Justice Advocates on the Proposed Settlement:
“This settlement brings some relief to Philadelphia residents who are struggling with ever rising utility bills. It also opens a new public conversation about how PGW can participate in the shift from polluting fossil fuels to affordable, fossil free energy in our city. We have a long way to go, but this is an important step toward building the just, sustainable energy system that we urgently need in Philadelphia,” said Sara Melton, Managing Director of Organizing, POWER Interfaith .
“We are pleased to have been able to fend off PGW's more extreme rate hikes as a result of this case, such as the fee for gas that people don't use. While we continue to push for PGW to transition from gas service to more affordable and sustainable alternatives, in the meantime, households need to be able to make ends meet," said Alex Bomstein, Executive Director, Clean Air Council.
“As medical professionals concerned deeply about climate chaos caused by fossil fuels including methane and the related impact of rising energy costs on patients, we are glad to have opposed PGW's proposed increases in rates and efforts to decouple the decrease in gas demand from PGW's bottom line. Gas poisons communities that live near its infrastructure and raises global temperatures, so to preserve our health and the lives and health of Pennsylvanians, our heat utility must transition to a renewable alternative,” said Dr. Joniqua Ceasar, M.D., Physicians for Social Responsibility Pennsylvania.
“While the fight for climate justice and a just transition is far from over, this settlement is a significant milestone in preserving energy affordability and environmental health for working Philadelphians. With this settlement, Philadelphia avoids locking in long-term to a polluting and increasingly costly gas system when more affordable, reliable, safer, and cleaner paths are available. Now we must work together to envision and build the energy system we deserve - one that equitably meets our urgent needs while remaining independent of fossil fuel interests,” said Kartik Amarnath, Mid-Atlantic Regulatory Director, Vote Solar.
“We know that as the climate continues to heat up, PGW will sell less gas, and its original proposal would have forced customers to make up for its lost revenue out of their own pockets. By preventing that, this settlement is a win for households struggling to afford ever-increasing energy costs. But the underlying problem remains: PGW’s business model is unsustainable in a warmer world. We’ll continue the fight to transform this municipal utility so that it stops contributing to the climate crisis AND can survive it financially without busting customers’ budgets,” Tom Schuster, Director, Sierra Club Pennsylvania Chapter.
“Thanks to improvements in energy efficiency and competition from electric appliances like heat pumps, PGW is selling less gas to fewer customers. And thanks to this settlement, PGW can’t force customers to pick up the tab for declining revenue. Now it is incumbent on PGW, state regulators and City leaders to proactively plan PGW’s future as we transition to safer, cleaner energy to heat our homes,” said Flora Cardoni, Deputy Director, PennEnvironment.
“By slashing the rate hike by more than 40% and rejecting PGW’s proposed revenue guarantee, this settlement is a clear win for PGW’s customers. But with its high concentration of leak-prone pipe, escalating spending and declining gas consumption, PGW remains on an unsustainable trajectory. We look forward to tackling these challenges along with partners, state and local policymakers, and PGW,” Abe Scarr, Energy and Utilities Program Director, PennPIRG
Click Here for the proposed settlement.
[Posted: August 19, 2025] PA Environment Digest
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