Report lists problems at Phila. Gas Works

October 21, 2008

Philadelphia Business Journal

The Economy League of Greater Philadelphia released a report Tuesday that urges an improvement in the performance of the city-owned Philadelphia Gas Works.

The report, commissioned by The Pew Charitable Trusts and the William Penn Foundation, says selling the utility will be difficult given the current credit crisis, but the city should do all it can to make the Gas Works more attractive to a potential future buyer.

The Economy League said in a summary of the report, "The Philadelphia Gas Works: Challenges and Solutions," that the Gas Works is "in a generally uncompetitive and financially precarious position. For consumers, the result is that their rates are much higher than those of peer cities. Meanwhile, the city's balance sheet carries PGW's growing capital debt while gaining no revenue from this considerable investment."

Problems that need to be addressed, the summary says, include a subsidy for poorer customers that "caps bills without incentivizing conservation. The result is that subsidized customers use 47 percent more gas on average than full rate-paying customers." That contributes to "even higher bills to market rate customers as they pay more for their own usage as well as more to subsidize the increased costs of PGW's low-income customer program." The report also cites a "convoluted governance" that has 30 officials involved in overseeing the utility, and "the number of employees per customer double the national average."

http://www.bizjournals.com/philadelphia/stories/2008/10/20/daily15.html