While Pennsylvania’s gas deregulation bill for residential andsmall commercial customers has grabbed most of the focus from thestate’s gas industry, the fate of Philadelphia’s embattledmunicipal gas utility, Philadelphia Gas Works (PGW), will also bedecided during the current legislative session. A movement hasarisen in both the state Senate and the House of Representatives toattach an amendment onto the deregulation bill which will shift PGWcontrol from the city government-selected Gas Commission to thePennsylvania Public Utilities Commission (PUC).

PGW is one of the largest municipally-owned gas utilities in thecountry. Due to high bill paying delinquency, managementinstability and weak liquidity, the independent bond-rating agencyMoody’s has given PGW a “Baa2” investment-grade rating, the lowestpossible 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 thecity. This constituency, which includes the mayor and some citycouncil members, said a shift of control could put a $860 millionof tax-exempt bonds at risk and end a 20% city discount PGW givesto senior citizens.

Many parties in the state government, however, think a changeshould be made, including the House Majority leader, John Perzeland the Senate Majority Caucus Secretary, Hank Salvatore. “The GasCommission is made up of politicians, whose interests aren’tnecessarily the same as even-handed state regulators looking toserve all customers,” said Perzel spokesman Stephen Drachler.

With the session ending on June 15, a vote on the issue isexpected within the next week.

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