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 gas.

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.

Alex Steis

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