I have heard that this is true in some industrial sectors (or was it cities?).
Steam engines are basically compressed air engines.
A quick Google search tells me that both washing machines and refrigerators were invented prior to and practical by the 1830s-40s. So, i see no bar to compressed air as a utility.
Unless it works better than electricity, ie less maintenance or transfer loss, it would be outdated by the 1960s equivalent ITTL. It would hang on until there were too few users to keep the utilities alive.
Wasn't there a train that ran on compressed air?
Elidor, cool idea. I like it. It stirs the cyberpunk in my soul.
If you're saying that a steam engine is similar thermodynamically to a compressed air engine, that's true on a very high level in that both may use a Carnot cycle. The resemblance ends there, however, in the amount of useful work one can derive from the unit mass of working fluid (that is, steam vs. air).
Setting that aside, compressed air motors could have driven home washing machines, vacuum cleaners, and other small appliances (e.g., fans, including furnace blowers) well into the earlier Victorian years, assuming the end use devices were developed sufficiently for consumer use. I take issue, however, with the notion that domestic mechanical refrigeration would have been applied widely: the refrigerants used commonly before the development of CFCs (e.g., sulfur dioxide; ammonia) were immediately hazardous to health. On the other hand, dishwashers were certainly practical by the late 1880s/early 1890s, and pneumatic controls were developed so that at least an automatically sequenced pneumatic dishwasher could have been available.
Yes, there were installations of compressed air-driven streetcars, with varying degrees of success--most of them not particularly successful. And at any rate, they were developed at about the same time that the 600 VDC street railway system became fully practical and economical, thereby relegating this alternate motive power source to the museum.