PA PUC Approves Conditional PGW Rate Hike
The Pennsylvania Public Utility Commission (PUC) announced it
has approved a settlement with the Philadelphia Gas Works (PGW)
that preserves its authority to oversee the selection of an
experienced independent manager to run the utility. In exchange,
the cash-strapped utility will be allowed to collect a previously
authorized interim base rate hike of $11 million.
The recent settlement allows PGW to raise its monthly service
charge for residential customers to recover $11 million between now
and Aug. 31. The PUC approval also allows the utility to raise its
gas cost rate by an additional $7 million to cover the bad debt
expense associated with the escalating costs of wholesale natural
The $11 million rate hike was initially approved on Nov. 22,
much to the dismay of PGW, which had requested a $52 million
increase. The PUC said that until now, the utility had refused to
accept the conditions of the approved increase and had chosen not
to implement it.
"We're bringing PGW in line with accepted business standards of
other jurisdictional utilities and we're confident the company is
now on the path to prudent financial management," said John M.
Quain, PUC chairman. "It was critical that they agree to hire an
independent manager. We also expect them to fully implement the
recommendations of the recent PUC audit."
PGW officially has 60 days to review the Jan. 24 audit and its
recommendations. The audit will then be made public, the PUC said.
The city of Philadelphia has agreed to hire an independent manager
by Dec. 31, 2001.
The two increases approved by the PUC will raise the monthly
bill of an average residential heating customer using 10 Mcf per
month by approximately $7.64, from $136 to $143.64.
The commission said the approved settlement is finalized only
when PGW and the city of Philadelphia withdraw their Commonwealth
Court appeals of the Nov. 22, 2000, order. Until that time, the
utility will be unable to raise its rate.
The PUC also said that it is currently looking over a $65
million base rate increase request submitted by PGW on Jan. 5. The
commission has nine months to rule.
Due to the skyrocketing commodity prices, the utility already
raised its gas cost rate by $133 million in January. It raised the
monthly bill of an average residential heating customer using 10
Mcf per month about $31, from $105 to $136.
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