The Pennsylvania Public Utility Commission (PUC) announced ithas approved a settlement with the Philadelphia Gas Works (PGW)that preserves its authority to oversee the selection of anexperienced independent manager to run the utility. In exchange,the cash-strapped utility will be allowed to collect a previouslyauthorized interim base rate hike of $11 million.

The recent settlement allows PGW to raise its monthly servicecharge for residential customers to recover $11 million between nowand Aug. 31. The PUC approval also allows the utility to raise itsgas cost rate by an additional $7 million to cover the bad debtexpense associated with the escalating costs of wholesale naturalgas.

The $11 million rate hike was initially approved on Nov. 22,much to the dismay of PGW, which had requested a $52 millionincrease. The PUC said that until now, the utility had refused toaccept the conditions of the approved increase and had chosen notto implement it.

“We’re bringing PGW in line with accepted business standards ofother jurisdictional utilities and we’re confident the company isnow on the path to prudent financial management,” said John M.Quain, PUC chairman. “It was critical that they agree to hire anindependent manager. We also expect them to fully implement therecommendations of the recent PUC audit.”

PGW officially has 60 days to review the Jan. 24 audit and itsrecommendations. The audit will then be made public, the PUC said.The city of Philadelphia has agreed to hire an independent managerby Dec. 31, 2001.

The two increases approved by the PUC will raise the monthlybill of an average residential heating customer using 10 Mcf permonth by approximately $7.64, from $136 to $143.64.

The commission said the approved settlement is finalized onlywhen PGW and the city of Philadelphia withdraw their CommonwealthCourt appeals of the Nov. 22, 2000, order. Until that time, theutility will be unable to raise its rate.

The PUC also said that it is currently looking over a $65million base rate increase request submitted by PGW on Jan. 5. Thecommission has nine months to rule.

Due to the skyrocketing commodity prices, the utility alreadyraised its gas cost rate by $133 million in January. It raised themonthly bill of an average residential heating customer using 10Mcf per month about $31, from $105 to $136.

Alex Steis

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