PHILADELPHIA, April 11, 2002 — The Pennsylvania PUC voted to grant PGW “extraordinary” rate relief of $36 million from the $44 million requested.
On February 25, PGW filed for extraordinary rate relief in response to concerns of the utility’s creditors and rating agencies regarding the absence of sufficient liquidity to meet financial obligations. The company’s difficult financial situation had been made even worse by the lost sales resulting from the warmest winter in 90 years of record keeping.
Without this rate relief, PGW was facing a potential downgrading of its bonds, an action which would have severely affected the company’s ability to provide safe and adequate gas service.
“We are enormously appreciative of the Public Utility Commission’s action. Their willingness to rule on our petition will make it possible to stabilize our financial operation,” said Thomas Knudsen, Interim President and Chief Executive Officer.
The increase will raise the bill of a typical residential customer using 100 thousand cubic feet (Mcf) of natural gas annually by about $71 per year. However, customers’ bills were recently reduced as a result of lower commodity costs. Overall, the typical residential customer bill is $1,100 per year, $381 less than a year ago.
To further assist the company in addressing its financial issues, Joyce Wilkerson, the Mayor’s Chief of Staff, has indicated that the administration is preparing to ask City Council to restructure the $45 million loan PGW owes the city. The present agreement requires PGW to pay the full amount next year.
The proposal would be to pay back the loan over three years ending in 2006. “If City Council approves the change, the company can be restructured financially by 2005. Also, this comes at a time when PGW is making measurable improvements in the areas of customer service, billing, and collections,” said Knudsen.
Founded in 1836, PGW is the nation’s largest municipally owned natural gas utility, serving a half million residential, commercial and industrial customers in the city of Philadelphia.