PA Legislature to Decide PGW's Fate
While Pennsylvania's gas deregulation bill for residential and
small commercial customers has grabbed most of the focus on the
state's gas industry, the fate of Philadelphia's embattled
municipal gas utility, Philadelphia Gas Works (PGW), also will be
decided during the current legislative session. A movement has
arisen in both the state Senate and the House of Representatives to
attach an amendment onto the deregulation bill, which would shift
PGW control from the city government-selected Gas Commission to the
Pennsylvania Public Utilities Commission (PUC).
PGW is one of the largest municipally-owned gas utilities in the
country. Because of high bill delinquencies, management instability
and weak liquidity, the independent bond-rating agency Moody's
Investor Service has given PGW a "Baa2" investment-grade rating,
the lowest possible rating without being considered a junk bond.
The city government, including Mayor Ed Rendell have voiced
opposition against shifting control of PGW from the city. This
constituency, which includes the Mayor and some city council
members, said a shift of control could put $860 million of
tax-exempt bonds at risk and end a 20% city discount PGW gives to
Many parties in the state government, however, think a change
should be made, including the House Majority leader John Perzel and
the Senate Majority Caucus Secretary Hank Salvatore. "The Gas
Commission is made up of politicians, whose interests aren't
necessarily the same as state regulators looking to serve all
customers," said Perzel spokesman Stephen Drachler. He added the
amendment should be inserted during House deliberations on
unbundling this week and the entire package should be approved by
both sides of the legislature by June 15.
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