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News Digest

PUC Oversight: Panacea or New Problem?
Fortnightly Magazine - October 1 2000
  • the successful sale of the 2,029-MW Millstone Nuclear Generating Station, the largest generating plant in New England, owned by Connecticut Light & Power Co., United Illuminating Co., and other minority owners, to Dominion Resources Inc. for $1.298 billion. Assets sold include 100 percent of Units 1 and 2, owned by CL&P and Western Massachusetts Electric Co., and 93.47 percent of Unit 3.
  • Hope, Salem, Peach Bottom. The New Jersey board authorized Atlantic City Electric Co. (ACE) to close the bidding to sell its minority interests (between 5 and 7 percent) in the Hope Creek, Salem, and Peach Bottom nuclear plants to majority owners PSEG Power LLC and PECO Energy Co. .
  • Oyster Creek. The New Jersey board also OK'd the sale of the 619-MW Oyster Creek nuclear plant by Jersey Central Power & Light Co. (doing business as GPU Energy) to AmerGen for $10 million. .

 

Gas Utilities

Muni Breakdown in Philly?

Philadelphia Gas Works , the largest municipally owned gas utility in the United States, is undergoing bureaucratic breakdown so severe that the city in August said it was prepared to chip in $10 million from its general fund to keep PGW afloat. According to a report in the , the muni's debt has grown so large that it will cost PGW about $90 million in interest payments during this fiscal year. The story of how it got there goes back many years, and involves politics, corruption, and technology failure.

PGW has been run by the city in some fashion for some 164 years and regulated since 1925 by a five-member gas commission, whose members now are the city controller or a representative, two city council appointees, and two mayoral appointees.

The gas commission is under the auspices of the Philadelphia Facilities Management Corp., a not-for-profit company incorporated in 1973 by the city to run PGW. The muni had been run by UGI Corp. until 1972, when then-Mayor Frank Rizzo fired UGI and started the new method of management-what many observers refer to as a patronage system. The gas commission has authority to set rates, approve natural gas supply contracts and operating budgets, and hire personnel. The gas commission and PGW face the enormous task of ensuring that natural gas flows to approximately 512,000 customers—95 percent residential—over a 129-square-mile area. But somehow they can't get it right. Due in part to mismanagement and part bad luck, their efforts seem doomed. Recently the weather contributed to the woes of PGW, when low gas demand brought about by three unusually warm winters resulted in as much as $60 million in revenue deficiencies.

Compounding problems is a new computer billing system installed in 1999 that cost three times as much as was budgeted and spit out either incorrect bills or none at all. When customers called to complain-and many did-no one answered, or if someone did, they were put on hold. An aging pipeline infrastructure isn't helping matters. The cash-strapped utility can't keep up with repairs.

Then there was an ill-fated plan to go into the electric business. PGW had signed a contract

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