PGW computer woes continue : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

February 2, 2000

PGW in 'crisis mode,' Gas Commission told

by Mark McDonald Daily News Staff Writer

It was not a debate about whether the glass is half full or half empty.

In PGW's case, there's almost nothing in the glass.

The PGW treasury is so depleted that the company's top budget official told the Philadelphia Gas Commission yesterday that the company is in a "crisis mode."

After two unusually warm winters and a current season that is still not generating substantial revenue, after a disastrous level of unanticipated spending on computer software that still doesn't work right and after a six-month total shutdown in collecting unpaid bills, the city-owned utility is reeling.

And while Mayor Street has talked about making "drastic" changes at PGW, the administration is far from being ready to make public its plan to resuscitate its tin-cup gas company.

One move that Street and City Council could make is to waive the company's payment of an annual $18 million dividend to the city's general fund. Think of it as a small profit for city taxpayers, but this year it's a tremendous outflow for the company.

Phil Bertocci, the Gas Commission's public advocate and a Community Legal Services attorney, set out the advocate's position.

"Our position is that PGW is in a very tight situation and it would make an enormous difference if the $18 million payment was waived for the fiscal year we are now in," he said.

PGW President Ben Hayllar said the company will be able to meet its payment to the city without harming its ability to maintain its all-important debt coverage ratio, which is a key provision in repaying more than $800 million in debt.

And Hayllar expressed surprise when he heard that there's a move to help the company with a one-time waiver on the dividend.

But he conceded the company is headed toward a cash crisis within a year and may need to generate at least $20 million in revenue, with a rate boost, which would be the first in eight years, by dramatically reducing spending, or a combination of the two.

Last year, PGW delayed its dividend payment to the city, incurring about $300,000 in interest payments to the city.

Stephanie Franklin-Suber, Street's chief of staff, said the administration had no comment on the proposed dividend waiver.

Much of the company's current fiscal distress was brought on by the ill-advised implementation last July of a computer software system for the company's complicated billing and customer service operation.

So far, the company has paid about $22 million on a system that was originally budgeted for just $10 million. In the past, Hayllar has estimated the total outlay on the system at $30 million.

In addition, the company says it's found about 35,000 accounts where no payments were being made. In some cases, the company didn't know the customers were on the system. Others were lost in the transition from the old software system to the new.

"That's found revenue if we can get it," Hayllar said. By the end of the fiscal year on Aug. 30, he hopes the company can get $5 million to $7 million from these ghost accounts.

In its concern for fiscal control, the commission essentially killed the company's proposed corporate contribution and sponsorship program. The company planned to give $105,000 to the Welcome America! celebration and $70,000 to the Millennium Philadelphia program.

Noting that about $2,500 had already been given to other groups, Hayllar said he agreed that giving ratepayers' money to community groups was inappropriate.

-- Martin Thompson (, February 02, 2000

Moderation questions? read the FAQ