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Jeremy Barton, a mechanical engineer with Venture Engineering and Construction, Inc, walks through the central vault located in the lower levels of the Kimpton Hotel Monaco Pittsburgh, Downtown on Friday, June 2, 2023. Cordia Energy is expanding its reach underground by laying new steam pipelines and taking over some of the district steam network that's being transferred from Pittsburgh Allegheny Thermal Corp. Cordia is also purchasing three Pittsburgh-area projects developed by Essential Utilities Inc., which owns the North Shore-based Peoples Natural Gas Co., the companies announced Tuesday.
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Peoples sells district energy systems to Cordia, which is widening its reach in Allegheny County

Pittsburgh Post-Gazette

Peoples sells district energy systems to Cordia, which is widening its reach in Allegheny County

Essential Utilities Inc., which owns the North Shore-based Peoples Natural Gas Co., is selling three Pittsburgh-area projects developed by the gas company and says it will no longer invest in non-utility assets.

The assets are being sold for $165 million to Cordia, a company that has already burrowed into Pittsburgh’s foundation as the operator of three district energy systems serving Downtown, Uptown and the North Shore.

The sale includes a natural gas generation plant and infrastructure that serves the microgrid at Pittsburgh International Airport (solar panels not included), seven boilers and a water heater that feed steam and hot water through six Allegheny County government buildings in Downtown, and the boilers and chillers that provide district heating and cooling to Allegheny Health Network’s Wexford Hospital.

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Phoenix-based Cordia already operates a large chunk of the thermal energy that flows underneath Pittsburgh. Its natural gas plants generate steam and chilled water, which fans out to Duquesne University and UPMC Mercy on one end, and to PNC Park, Allegheny General Hospital and the Carnegie Science Center on the other.

Jeremy Barton, a mechanical engineer with Venture Engineering and Construction, Inc, shines a flashlight inside a steam pipe in a vault under the former Kaufmann’s Department Store on Friday, June 2, 2023, in Downtown Pittsburgh.
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Steam pipe dream: Cordia hopes to bring new life to Downtown Pittsburgh’s ancient underground thermal system

This summer, Cordia took over serving the 12 customers that remained on the old Pittsburgh Allegheny County Thermal system when the longtime nonprofit cooperative ceased operations.

It was Allegheny County’s six buildings, including the County Courthouse and the City-County Building, leaving PACT that accelerated its demise. Instead of getting heat from PACT, Allegheny County contracted with Peoples to install and run boilers. 

Peoples, which was purchased by Essential in 2020, had developed these projects outside of its role as a regulated utility.

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But Essential, which operates utility water and wastewater systems in addition to Peoples, is getting out of the business of developing and running non-utility projects, said Nick Paradise, a spokesman for Peoples.

“We are changing the approach,” he said. The company will play more of a “supporting role” in these kinds of ventures going forward — after all, such projects will need natural gas in order to generate steam and hot water. But it will no longer pursue investments in non-utility assets, he said.

The difference between regulated, utility-type services and unregulated ventures is risk and return. Utility projects are funded by ratepayers and typically carry a steady, single-digit or low double-digit return on investment. Unregulated investments need to draw from debt and equity markets, and aren’t guaranteed a return.

For Cordia, however, the acquired assets fit neatly into the company’s strategy of regional expansion.

Anya Litvak: alitvak@post-gazette.com 

First Published: October 3, 2023, 10:18 p.m.
Updated: October 4, 2023, 6:00 p.m.

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Jeremy Barton, a mechanical engineer with Venture Engineering and Construction, Inc, walks through the central vault located in the lower levels of the Kimpton Hotel Monaco Pittsburgh, Downtown on Friday, June 2, 2023. Cordia Energy is expanding its reach underground by laying new steam pipelines and taking over some of the district steam network that's being transferred from Pittsburgh Allegheny Thermal Corp. Cordia is also purchasing three Pittsburgh-area projects developed by Essential Utilities Inc., which owns the North Shore-based Peoples Natural Gas Co., the companies announced Tuesday.  (Pittsburgh Post-Gazette)
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