White Lightning Axiom: Redux

A bit late off the ball on this one, but it's been a damn long time coming.

First it was the Philadelphia schools. Then it was the Philadelphia Parking Authority and the Pennsylvania Convention Center. Now, House Speaker John Perzel (R., Phila.) has a new city target in his sights: Philadelphia Gas Works.
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But the response from city officials this time might well be: Take our debt-ridden utility. Please.

Transferring the 168-year-old utility would require approval by the General Assembly. Legislation for that is being written and is expected to be made public next week, Republican officials said.

If the plan passes, the state would issue a bond to pay off the utility's $1 billion debt. Once it is paid off, the state would sell the utility to a private company, officials said.
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City Councilman Michael A. Nutter, chairman of the transportation and utility committee, said he "eagerly awaits" details of the proposal.

"Clearly there needs to be a solution to PGW's financial and operational crisis," Nutter said. "I would like to see how a new gas entity would be structured to address service to low- and middle-income users and seniors, how it can be cost-competitive and reduce overall utility costs."

Nutter said city officials have been discussing a sale of PGW for a decade but knew that, with its debt load, it would be unattractive to a private utility.

But Councilman David Cohen said he was concerned that a bottom-line-oriented private utility would be quicker to turn off heat for those who couldn't afford it.

"This would destroy the very purpose of PGW as a public service," he said. "It would be much better if they devised a system of healthy payments to Philadelphia so that more of its citizens could get heat."

If these folks are so concerned about the ability of the poor, the wretched, the downtrodden to pay their bills, then how about lumping this under the multitude of charity programs (wic, food stamps, welfare, etc ...) that already exist for this sort of social support. Over and over again, we have seen how privatization works if done right and fails horribly if done wrong (Paging Mr Grey Davis...).

David Shanzer, a utility analyst with Janney Montgomery Scott L.L.C. in Philadelphia, said a state takeover of the utility is the better fiscal alternative to leaving it as it is.

"I would rather the state provide incentives to allow the sale of the company, rather than it being the intermediary," Shanzer said. "But [erasing its debt] would make it palatable to an investor-owned utility."

Plagued by high delinquency rates and debt, the utility has fought to turn itself around in the last year. More than half of its 485,000 customers regularly fail to pay their bills, and about 15,000 did not pay at all last year. PGW instituted a get-tough policy on deadbeats last year that was given a boost by a new state law lifting the winter moratorium on utility shutoffs. As a result, service to 4,409 customers was cut off between January and April.

At the same time the utility's bond rating has sunk and rates have doubled to an average of $1,638 a year.

Philip Bertocci, an attorney with Community Legal Services, who serves as public advocate in cases involving PGW, said any transfer of jurisdiction would be a violation of home rule.

"The city owns PGW, and it is supposed to be run for the citizens of Philadelphia," he said.

These two jokers are just waiting for a state bail-out with the expected $500 million revenue surplus this year. Running this as a business and not a feed-bag by scoff-laws suffering from the habitual exploitation of our less civic minded citizenry would go a long ways to reduce costs and improve service.