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Authorizing the execution, delivery and performance by the Philadelphia Facilities Management Corporation on behalf of the Philadelphia Gas Works of an amended Service Agreement with Transcontinental Gas Pipe Line Company, LLC for gas storage services under the Transco WSS Open Access Rate Schedule.
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WHEREAS, Pursuant to Paragraph 2 of Section II of the Agreement Between The City of Philadelphia (the “City”) and the Philadelphia Facilities Management Corporation (“PFMC”) for the Management and Operation of the Philadelphia Gas Works (“PGW”) dated December 29, 1972, authorized pursuant to an Ordinance of the Philadelphia City Council (“City Council”) approved December 29, 1972 (Bill No. 455), as further amended (the “Management Agreement/Ordinance”), PFMC is required to obtain the advance recommendation of the Philadelphia Gas Commission (the “Gas Commission”) and the approval of City Council with respect to the purchase of gas transportation and storage (except in temporary or emergency situations, in which case PFMC must submit contracts for such purchases within thirty (30) days after initiating such purchases to the Gas Commission and City Council for their approval); and
WHEREAS, Pursuant to Paragraph 1 of Section II of the Management Agreement/Ordinance, PFMC is required to take all reasonable steps to insure that the capacity of PGW to manufacture, provide and distribute gas is at all times sufficient for the estimated maximum requirements of gas users in the City; and
WHEREAS, PFMC enters into natural gas storage and transportation contracts on behalf of PGW to allow PGW to: (i) “balance” both its system requirements as well as third party supplier requirements when actual demand may be more or less than the forecasted demand; (ii) reduce the amount of gas and additional firm pipeline capacity that PGW needs to keep under contract for demand spikes in the operating season; (iii) maintain added security in case of pipeline disruptions (i.e., hurricanes, pipeline failures, supply freeze offs and terrorist actions), (iv) reduce dependency on PGW's supplemental supply assets (e.g., Liquefied Natural Gas (“LNG”)); and (iv) have the potential to obtain a physical pricing advantage during the operating season since all gas volumes are historically injected outside of the operating season time frame when gas demand ebbs and pricing is historically lower; and
WHEREAS, as part of its system to permit natural gas to be delivered to the City gate, PGW has a Service Agreement Under Rate Schedule Washington Storage Service (“WSS”) Open Access for firm storage service with Transcontinental Gas Pipe Line Company, LLC (“Transco”) (the “Service Agreement”), dated April 3, 2001, as amended by the Amendment to the Service Agreement dated June 16, 2011 (the “First Amendment”), and by the Amendment to the Service Agreement dated October 15, 2024 (the “Second Amendment”), and
WHEREAS, PGW entered into the Second Amendment to the Service Agreement pursuant to the Stipulation and Agreement filed on January 19, 2024 by Transco in resolution of the Docket Nos. RP21-1143 and RP23-840 proceedings before the Federal Energy Regulatory Commission (“FERC”), as approved without modification by FERC by letter order dated February 29, 2024 (“Settlement Agreement”), and
WHEREAS, PFMC, acting by and through PGW, had not heretofore sought approval of the Second Amendment entered into pursuant to the FERC Settlement Agreement from the Philadelphia Gas Commission and City Council, as required pursuant to the Gas Pre-Approval Ordinance (Bill No. 230105), and instead provided said Second Amendment upon filing the Third Amendment (as defined below); and
WHEREAS, the Second Amendment shall expire on March 31, 2026; and
WHEREAS, Such storage comprises approximately 20% of PGW’s total market area storage capacity and is one of PGW’s most important storages; and
WHEREAS, PGW is required to comply with the least cost fuel procurement policy requirement mandated by the Pennsylvania Public Utility Code at 66 Pa.C.S.A. §1318(a); and
WHEREAS, if PGW is unable to extend its contract for the WSS storage services with Transco, PGW will have to attempt to “replicate” this service for both balancing and operating season deliverability, at greatly increased costs; and
WHEREAS, Transco has informed PGW that it is willing to offer PGW an extension and renewal of the Service Agreement, as amended, for an additional fixed term ending on April 1, 2035 with the costs to be paid for said storage services to be fixed until April 1, 2035; and
WHEREAS, PFMC, on behalf of PGW, wishes to enter a further Amendment to Service Agreement (the “Third Amendment”), which will continue to provide that all payments required to be made in connection therewith shall be made solely from the revenues of PGW in accordance with Bill No. 230105; and
WHEREAS, at a public meeting held on January 13, 2026, the Philadelphia Gas Commission recommended that City Council approve the execution, delivery and performance of the Third Amendment to Service Agreement by PFMC on behalf of PGW, subject to the terms and conditions set forth in the written Motion approved at that meeting; now, therefore,
THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
Section 1. The Second Amendment, attached hereto as Exhibit “A,” is hereby acknowledged and deemed approved by City Council effective as of October 15, 2024, its date of execution.
Section 2. The Philadelphia Facilities Management Corporation (“PFMC”) on behalf of the Philadelphia Gas Works (“PGW”) is hereby authorized to execute, deliver and perform the Third Amendment to Service Agreement Under Rate Schedule Washington Storage Service (“WSS”) Open Access with Transcontinental Gas Pipe Line Company, LLC (“Transco”) for the period April 1, 2026 through April 1, 2035, in the form attached hereto as Exhibit “B,” except and to the extent as changes may be approved by the City Solicitor.
SECTION 3. PFMC, on behalf of PGW, is hereby authorized and directed to execute and deliver such other documents, and to take such other action as is deemed necessary or appropriate in order to effectuate this Ordinance.
Exhibit A
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