In mid-March, a group of Harrisburg property owners received a big surprise–they had six months to find, install and pay for an entirely new way to heat their homes.
These 25 customers use “city steam,” a century-old system initially provided by the city and, now, by NRG Energy Center Harrisburg. NRG informed them that their steam distribution lines weren’t profitable, so it was shutting them down.
“We didn’t ask for this,” said Eric Webb of the 700-block of Green Street. “We were satisfied with steam heat.”
Most city steam customers are in the oldest parts of downtown and Midtown. The lines that NRG plans to abandon–the current plan is to end service in September–will affect customers on parts of N. 3rd, Green, Locust, N. 2nd, Forster, Bartine and Briggs streets.
NRG has offered some compensation to its soon-to-be ex-customers: 25 percent of the cost of a new boiler or a five-year loan, less a $1,000 subsidy, that comes with a lien against the property until the loan is repaid. According to NRG, almost all customers choose the first option.
The problem, said Webb, is that new steam boilers cost $6,000 to $9,000 installed. In addition, many homes would require additional work, such as vents, gas lines and other infrastructure, which could add thousands more to the cost.
Most of his neighbors, he said, just don’t have that kind of money. In fact, many are retired and on fixed incomes.
“This is a bad economy,” he said. “Who wants to get into more debt or incur a large, unexpected expense when, tomorrow, the roof could go?”
This is the second time in four years that NRG has terminated service. In 2007, the company abandoned eight line segments affecting about 35 customers.
When NRG bought the system from Statoil Energy in 2000, city steam served about 300 customers. Come winter, it will serve just 200 or so, due to line abandonments and customers removing themselves from the system.
NRG defends its decision to end service, saying that retaining unprofitable lines unfairly penalizes its other customers, who pay more as a result.
“These 25 customers are served by seven inefficient pipelines that cost more than they make,” said Jan Sockel, general manager of NRG Energy Center Harrisburg. “Other customers actually pay for the subsidization of these customers.”
Moreover, NRG perceives its compensation model as fair. By combining the company’s subsidy with a switch to less-costly natural gas, customers can recoup their investment in less than 10 years, said Sockel.
“Over time, it’s cheaper to heat with natural gas,” he said.
It’s not just residences that are due to be shut off. The Broad Street Market and the Historic Harrisburg Association building, which face each other across N. 3rd Street, also received notices of termination.
“This is a significant cost we’re going to be undertaking,” said John Campbell, HHA executive director. “Being a nonprofit, we’re not able to find these resources.”
Campbell said he’s received quotes of $50,000 to $100,000 for a new heating/cooling system for HHA. Meanwhile, the Broad Street Market faces a tab of $250,000 to $650,000 for its two buildings, he said.
Seeking a remedy, HAA, the Broad Street Market and a group of 18 home-owners have all engaged the state’s Office of Consumer Advocate (OCA), which represents consumers before the state Public Utility Commission. They wish either to have their service retained or receive better financial terms from NRG.
State Consumer Advocate Sonny Popowsky said he has met with NRG, but wouldn’t comment on those talks.
“We filed a protest,” he said. “By our participation, we hope to get a more reasonable solution to the case.”
Sockel confirmed that NRG has met with OCA and said the company may be willing to tweak its offer. For instance, it may be flexible on ending service in September, perhaps granting customers additional time to convert to in-building heat.
“We’re working with OCA to arrive at a resolution that will satisfy the customers and OCA,” he said.
At press time, no firm adjustments to the initial offer had been made.
Sockel added that NRG plans to continue steam service in Harrisburg. The company serves several large commercial customers, including the state Capitol complex.
Additional line segments, though, may be terminated in coming years, he said. NRG’s rapidly diminishing residential user base includes several blocks of North Street and scattered locations downtown.
For his part, Webb isn’t banking on a better deal from NRG. His group of homeowners is exploring volume discounts from heating contractors.
Whatever the outcome, he’s incensed that he believes he’s losing service to the benefit of NRG.
“NRG says that these steam lines result in reduced revenue for them” he said. “So, we’re going to help make them more profitable?”
