PGW Exits Electricity, Cuts Marketing Dept.
Saying it wants to focus on its core gas business, Philadelphia
Gas Works (PGW) has abandoned its entry into electricity marketing
and several other retail marketing ventures and will reduce the
size of its marketing staff. PGW is the nation's largest
municipally owned utility.
"PGW can now focus on its primary business of providing safe and
dependable natural gas service to our more than 500,000 customers,"
said interim CEO Ben Hayllar.
Spokesman Peter Yaffe said PGW has suffered from several
warmer-than-normal winters and needs to focus on its core gas
business. "Our marketing department just wasn't bringing in the
revenues to support a continued expansion. The direct equipment
business wasn't particularly successful," Yaffe said. "At one point
we had a vision of expanding beyond the borders of Philadelphia,
but that simply hasn't materialized."
PGW had developed a venture with Edison Source to provide retail
electricity to customers who selected PGW/Edison Source as their
provider under Pennsylvania's Electric Choice program. Edison
Source had the license to provide the electricity, and PGW assisted
with the marketing. Back in August, then PGW CEO James Hawes III
called the Edison Source electricity alliance "a terrific alliance
for PGW and all of our customers and stakeholders. Edison Source
provides us with a broad range of experience that will allow PGW to
market and deliver reliable electric generation service, at
competitive rates, to our more than 500,000 customers."
Customers who signed up with PGW/Edison Source are to be
notified that they will continue with Edison Source or its designee
for electricity supply, said Bud Karachiwala, PGW vice president of
PGW plans to eliminate 32 management positions, out of a current
52, from the marketing staff and offer the displaced workers the
chance to compete for 17 new jobs within the marketing department.
Also announced last week, the Philadelphia Gas Commission plans
to sharply reduce PGW's Gas Cost Rate (GCR) for the remainder of
fiscal year 1998-1999, setting rates at $1.0161/Mcf effective Jan.
19. According to PGW's first quarter GCR report filed with the
commission, annual sales volume and gas expenses are lower than
anticipated when PGW filed its proposed GCR in August 1998. PGW had
requested the commission set a GCR for the remainder of FY
1998-1999 at $1.24/Mcf, a decrease from the FY 1997-1998 level of
Joe Fisher, Houston
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