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PGW Exits Electricity, Cuts Marketing Dept.

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 gas management.

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 $1.43/Mcf.

Joe Fisher, Houston

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