PA Legislature to Decide PGW's Fate
While Pennsylvania's gas deregulation bill for residential and
small commercial customers has grabbed most of the focus from the
state's gas industry, the fate of Philadelphia's embattled
municipal gas utility, Philadelphia Gas Works (PGW), will also be
decided during the current legislative session. A movement has
arisen in both the state Senate and the House of Representatives to
attach an amendment onto the deregulation bill which will shift PGW
control from the city government-selected Gas Commission to the
Pennsylvania Public Utilities Commission (PUC).
PGW is one of the largest municipally-owned gas utilities in the
country. Due to high bill paying delinquency, management
instability and weak liquidity, the independent bond-rating agency
Moody's has given PGW a "Baa2" investment-grade rating, the lowest
possible rating without being considered a junk bond.
The city government, including Ed Rendell, the city's mayor,
have voiced opposition against shifting control of PGW from the
city. This constituency, which includes the mayor and some city
council members, said a shift of control could put a $860 million
of tax-exempt bonds at risk and end a 20% city discount PGW gives
to senior citizens.
Many parties in the state government, however, think a change
should be made, including the House Majority leader, John Perzel
and the Senate Majority Caucus Secretary, Hank Salvatore. "The Gas
Commission is made up of politicians, whose interests aren't
necessarily the same as even-handed state regulators looking to
serve all customers," said Perzel spokesman Stephen Drachler.
With the session ending on June 15, a vote on the issue is
expected within the next week.
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