Is Downtown Pittsburgh heat system losing steam?

Fewer ratepayers means higher costs

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A steam-powered Downtown?

It sounds like something we left behind with Queen Victoria. But steam is a business worth millions in Pittsburgh -- and as it sinks under its own weight, Allegheny County officials are worried we're paying too much.

In a report released Wednesday, county Controller Chelsa Wagner examined Pittsburgh Allegheny County Thermal, a semi-public company that supplies steam heat to more than 50 Downtown buildings, including the Allegheny County Courthouse and the City-County Building.

Her findings mirrored what some already know: Pittsburgh's steam is expensive and difficult to market, saddling government facilities with higher costs while a declining base of private clients takes price breaks.

"In recent years, PACT has not responded to the needs and challenges of the Downtown business district and must immediately focus on lowering costs and increasing membership," Ms. Wagner said in a news release.

Steam heat came to Pittsburgh in 1915, when the Allegheny County Steam Heating Co. dug the first distribution network under city streets. Steam was generated at a central facility and shot through tunnels to member buildings, where it heated the offices of the Andrew Mellons of Pittsburgh.

In 1983, the company converted to PACT, a semi-public company owned by its ratepayers.

But there are fewer ratepayers every year. Engineers designed the system for 300 users; in 1992, PACT only had 102. Now it has 56, despite pricing deals that temporarily lower rates for new customers.

PACT's steam plant at Fort Duquesne Boulevard and Cecil Way has the capacity to generate 4.4 million pounds of steam a year. Because of low demand, it only makes less than 15 percent of that, auditors found.

Ms. Wagner's report draws into question a larger issue: Does steam still have a place Downtown? In the age of central boilers and cheap natural gas, does boiling water in a mammoth plant and sending super-hot steam under city streets make sense?

Yes, says PACT President Robert Fazio, a 27-year veteran of the company. He's making a new push to sign up Downtown skyscrapers that power their own boilers, telling them steam power is cleaner, more efficient and cheaper in the long run.

"This steam system is a regional asset to the community," he said. "If we were able to bring more people on to the system, it would be beneficial to everyone."

He ticks off the benefits. Businesses pay little upfront to hook up to existing infrastructure. There's only one natural gas-burning plant, making emissions monitoring easier. And each client who signs up lowers rates for everyone.

That's what makes steam attractive to groups like Sustainable Pittsburgh, a local environmental advocacy group. Generating heat at a central location makes more sense than at a hundred different buildings, executive director Court Gould said. And he likes that shale gas produced locally could find a market here.

But auditors say the steam plant doesn't deliver on promises. Rates now hover around $27.50 per thousand pounds of steam, more than what most buildings would pay to heat themselves. A similar steam setup in Philadelphia charges half PACT's rate.

Rugby Realty, which owns the Gulf Tower and the Frick Building, recently renovated the Frick Building's HVAC system and installed a boiler, cutting the cord to PACT. President Aaron Stauber said the renovation wasn't because of the steam plant's prices, but he doesn't find Mr. Fazio's offer to sign up very enticing. "I think to us the question is, what rates would they have to provide to us to make it competitive not to make just go ahead and put a gas system in?" he said.

He could soon be joined by Allegheny County, which accounts for 42 percent of steam usage along with other government buildings. The county has ditched a long-term contract with PACT in favor of a month-to-month agreement, and county Executive Rich Fitzgerald's office says administrators are exploring alternatives.

If the city and the county both cut service, PACT's private customers would likely be saddled with unaffordable costs, leaving the whole system to founder.

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Andrew McGill: amcgill@post-gazette.com or 412-263-1497.


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