NGI The Weekly Gas Market Report
Saying it wants to focus on its core gas business, PhiladelphiaGas Works (PGW) has abandoned its entry into electricity marketingand several other retail marketing ventures and will reduce thesize of its marketing staff. PGW is the nation’s largestmunicipally owned utility.
“PGW can now focus on its primary business of providing safe anddependable natural gas service to our more than 500,000 customers,”said interim CEO Ben Hayllar.
Spokesman Peter Yaffe said PGW has suffered from severalwarmer-than-normal winters and needs to focus on its core gasbusiness. “Our marketing department just wasn’t bringing in therevenues to support a continued expansion. The direct equipmentbusiness wasn’t particularly successful,” Yaffe said. “At one pointwe 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 retailelectricity to customers who selected PGW/Edison Source as theirprovider under Pennsylvania’s Electric Choice program. EdisonSource had the license to provide the electricity, and PGW assistedwith the marketing. Back in August, then PGW CEO James Hawes IIIcalled the Edison Source electricity alliance “a terrific alliancefor PGW and all of our customers and stakeholders. Edison Sourceprovides us with a broad range of experience that will allow PGW tomarket and deliver reliable electric generation service, atcompetitive rates, to our more than 500,000 customers.”
Customers who signed up with PGW/Edison Source are to benotified that they will continue with Edison Source or its designeefor electricity supply, said Bud Karachiwala, PGW vice president ofgas management.
PGW plans to eliminate 32 management positions, out of a current52, from the marketing staff and offer the displaced workers thechance to compete for 17 new jobs within the marketing department.
Also announced last week, the Philadelphia Gas Commission plansto sharply reduce PGW’s Gas Cost Rate (GCR) for the remainder offiscal year 1998-1999, setting rates at $1.0161/Mcf effective Jan.19. According to PGW’s first quarter GCR report filed with thecommission, annual sales volume and gas expenses are lower thananticipated when PGW filed its proposed GCR in August 1998. PGW hadrequested the commission set a GCR for the remainder of FY1998-1999 at $1.24/Mcf, a decrease from the FY 1997-1998 level of$1.43/Mcf.
Joe Fisher, Houston
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