PHILADELPHIA OFFICIALS FILE BRIEF AGAINST PGW SURCHARGE REQUEST
HARRISBURG, June 14, 2004 – A group of Philadelphia public officials filed a brief today with the Pennsylvania Public Utility Commission (PUC) opposing a proposed surcharge on the bills of natural gas customers in the city.
"We said from the very beginning that such a surcharge was not only unfair but that it was also unnecessary, and we are presenting evidence to the PUC today to support that position," said state Senator Vincent Fumo (D-Philadelphia).
Submitting the brief along with Fumo were Democratic state senators Michael Stack and Anthony Williams of Philadelphia, District Attorney Lynne Abraham, City Council President Anna C. Verna, and Council members Jim Kenney, Frank DiCicco, Michael Nutter, David Cohen, Joan Krajewski, and Juan Ramos.
They supplied information to the PUC showing that:
PGW’s financial condition has changed since it made the request for the surcharge.
The company violated correct legal procedures in submitting the surcharge request.
The substance of the application contains errors of law.
In March of this year, Philadelphia Gas Works (PGW) announced that it needed additional funds to compensate for customers who don’t pay their bills. The company asked the PUC to place a surcharge on the monthly bills of all paying customers without identifying it as a surcharge. On April 15, the group of public officials petitioned the PUC for the right to intervene in the case, and the Commission granted that right.
PGW has one of the worst collection rates of any utility in the state.
"PGW should take steps to address its own problems before passing more costs onto customers. The company could be making more of an effort to correct its internal problems," Williams said.
"Let's explore the maximum range of sound management and financial practices to cure PGW's maladies before wreaking havoc on our citizens with an ill-advised surcharge," said Stack.
The brief points out that since the original filing, PGW’s financial condition has improved in several ways. The city has agreed to grant back the $18 million that it annually receives from the gas company, and has agreed to defer for two years the repayment of an interest-free $45 million loan. The company also has negotiated deferral payments on its natural gas supply. Additionally, PGW’s own projections of its collection rate for the 2004 fiscal year have improved.
The brief also argues that PGW management did not possess legal authority to petition the PUC for the surcharge because it has not first sought approval from the Philadelphia Gas Commission.
PGW’s proposal for the Cash Receipts Reconciliation Clause (CRRC) also violates several well established principles of public utility law. It incorrectly categorizes uncollectible expenses as gas costs, it asks paying customers to explicitly carry the burden for non-paying customers in an unfair and unreasonable way, and it would constitute illegal retroactive rate-making.
"This is an important step in protecting the citizens of Philadelphia who struggle every day to pay their gas bill, and I salute Senator Fumo for his leadership on this issue," said District Attorney Lynne Abraham."
The brief also urges PGW to petition the PUC for a set of regulatory changes that would allow the company to improve its cash receipts. (One city council intervener disagrees with several of the proposed changes on the list.)
(1) requiring deposits for customers who have been terminated for non-payment;
(2) payment of the full balance for delinquent Level 4 customers (at or above 350% of federal poverty guidelines);
(3) narrowly defining exceptions for only one delinquent payment agreement;
(4) shortening payment agreement timelines for level 4 customers; (at or above 350% of federal poverty guidelines);
(5) streamlining termination processes based on the financial means of customers;
(6) allowing winter termination for delinquent customers who refuse payment agreements;
(7) permitting one day terminations if PGW’s collection office is open and manpower exists to reconnect the customer the following day; and,
(8) permitting PGW to utilize automatic-meter-reading technology for developing customer bills.
Note to members of the media: A copy of the brief is available upon request from Sen. Fumo’s office. It has also been filed at the PUC.