Pennsylvania regulators have said Philadelphia Gas Works (PGW) can retain 60% of the $17.58 million in over-collections that the utility had hoped to use to keep its debt-ridden operations afloat during the first month of the New Year.
The Pennsylvania Public Utility Commission (PUC), in a letter to PGW’s attorney in Harrisburg, PA, said the gas utility would be allowed to keep $10.58 million in over-collections to eliminate some of the expected red ink in January, but it would have to return $7 million to its ratepayers.
With respect to the $7 million, the PUC said it “will defer the mechanics and timing of those actions” until later. But it’s likely that PGW will return the over-collected amounts in the form of rate reductions to its customers.
“[W]e are convinced that the significant cash deficiency projected for January 2002 warrants PGW’s use of the $10.58 million in the reserve account as a measure to enable it to meet debt service requirements and avoid a violation of the bond covenants,” the state commission said in the Dec. 26 letter. Even with the $10.58 million, the utility said it expects to close out January with a deficit of about $8.4 million.
“As to the additional $7 million sought to be collected by PGW, however, we agree with the parties who have opposed that recovery and we are disallowing that portion of the request,” the state regulators said.
In seeking to retain the funds, PGW said the 44% warmer-than-normal weather in November and similar trends in December “have significantly impacted its cash flow during this period,” the PUC noted. “Particularly with major expenses facing PGW in January 2002, including a debt service payment of $24.3 million, a $32.7 million natural gas invoice and $1.9 million in payroll and other disbursements, PGW submits that the reserve accounts are needed to ensure that it meets its debt service and cash obligations.”
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