While Pennsylvania’s gas deregulation bill for residential andsmall commercial customers has grabbed most of the focus on thestate’s gas industry, the fate of Philadelphia’s embattledmunicipal gas utility, Philadelphia Gas Works (PGW), also will 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 would shiftPGW control 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. Because of high bill delinquencies, management instabilityand weak liquidity, the independent bond-rating agency Moody’sInvestor 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 voicedopposition against shifting control of PGW from the city. Thisconstituency, which includes the Mayor and some city councilmembers, said a shift of control could put $860 million oftax-exempt bonds at risk and end a 20% city discount PGW gives tosenior citizens.

Many parties in the state government, however, think a changeshould be made, including the House Majority leader John Perzel andthe Senate Majority Caucus Secretary Hank Salvatore. “The GasCommission is made up of politicians, whose interests aren’tnecessarily the same as state regulators looking to serve allcustomers,” said Perzel spokesman Stephen Drachler. He added theamendment should be inserted during House deliberations onunbundling this week and the entire package should be approved byboth sides of the legislature by June 15.

John Norris

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