COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, October 24, 2005 2:35 p.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIRWOMAN COUNCIL PRESIDENT ANNA VERNA COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILWOMAN MARIAN B. TASCO BILL 050792 - An ordinance approving the Fiscal Year 2006 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good afternoon. Thank you for your patience. We are now ready to begin, and we'll call into session our Finance hearing with regard to Bill No. 050792. The Chair will ask the Clerk to read the title of the bill. Madam President, we note a quorum is here. We pulled the President from her meeting and just got a quorum. Thank you very much. We have President Anna Verna. To my left, Councilman Juan Ramos, Councilwoman Marian Tasco. To my right, Councilwoman Blondell Reynolds Brown, Vice-Chair. To her right, W. Wilson Goode. So a quorum is noted. Clerk. (Council President Verna left the Council Chambers.)
Yes, ma'am. An ordinance approving the Fiscal Year 2006 Capital Budget providing for expenditures 3 10/24/05 - FINANCE - BILL 050792 for the capital purposes of the Philadelphia Gas Works (including the supplying of funds in connection therewith) subject to certain constraints and conditions, and acknowledging receipt of the Forecast of Capital Budgets for Fiscal Years 2007 through 2011, Bill No. 9 050792.
Thank you very much. The Chair will ask those representing PGW, Craig White, COO is present, we thank all of you who are present, and we welcome you and ask you to begin your testimony.
My name is Craig White. I'm the acting Chief Operating Officer at Philadelphia Gas Works, and I'm here before you today in reference to Philadelphia Gas Works' Capital Budget. 4 10/24/05 - FINANCE - BILL 050792 We have submitted again a budget that is focused on meeting the core issues of capital in the company, which is particularly the areas of our distribution, our field services and our gas processing or gas management area. As has been the case in the past years, the majority of the dollars associated with this Capital Budget do pertain to safety reliability. And beyond that, I would say that there is one additional item. We had initially received a denial of two aspects of the Capital Budget, and after further review by the Gas Commission, we have asked for reconsideration of that, and I believe that is to be addressed today, if I'm not mistaken, and that would be in the area of our data warehouse and our document management. Aside from that, I've submitted written testimony. I'm not going to read that. I'm sure you don't want me to do that, and I'm here to answer whatever 5 10/24/05 - FINANCE - BILL 050792 questions you may have.
Thank you very much. Would you address the efforts made by PGW to help customers pay their gas bills in light of recent increases in gas rates?
Okay. I'll do my best on that front. We had a City Council briefing a week or so back, and at that briefing, we discussed both the very high price of natural gas and what we believe will be a continuance of higher prices, particularly through this winter period. We also talked about providing, at the request of many of the Councilmembers, a tool-kit of information, which would support both the Councilperson and their staff in addressing constituent issues pertaining to the high cost of gas and what our customers and your constituents can do to help support them during this very 6 10/24/05 - FINANCE - BILL 050792 difficult time. Obviously, we have both low-income programs that are discussed in that tool-kit, as well as conservation measures that are hopefully easily understandable things that people can do, extending from things such as just turning your thermostat down to weather stripping and things that will enable you to keep air infiltration from the house. With respect to the low-income programs, we stressed our CRP program, ways in which to acquire LIHEAP and Crisis grants and things of that nature. I have with me up here Mr. Hershey, and Mr. Hershey has focused on this particular issue, and I would ask at this point if he has any further comments that would be beneficial, he can certainly make them.
I'm sorry. My name is Steve Hershey. I'm Vice-President, Community Initiatives, at PGW. Mr. White is exactly correct. We have a number of programs in place that have been described and have been in place for some years. In addition, last year we worked with the City, with the Mayor's office, to create a special grant program that would be used to assist customers whose service was off to restore service. This year we've worked with the Mayor's office to dramatically increase the size of that program and begin it much earlier, and our hope is to begin it coincident with the LIHEAP program, which starts on November 7th. Just this morning, I believe that I got a commitment from the Mayor's office to increase the size of the grant, 8 10/24/05 - FINANCE - BILL 050792 as well as the funding for the program. Beyond that particular program, we are also expanding the weatherization workshops, which we began last winter. Last winter we held six workshops in low-income communities. This year our intention is to hold approximately 20. The purpose of those workshops would be to explain the benefits of weatherization, then provide hands-on instruction on how to use caulk, how to use plastic window covering, weather stripping, the kind of materials that people can use themselves, and it is our plan at the end of the workshop to distribute that material for free. Last year we were able to obtain donations from the manufacturers of caulk and weather stripping and things like that. This year, perhaps because of Katrina, we've been pretty roundly dismissed and we have not gotten the donations that we asked for, and we have a tentative commitment from the Mayor's 9 10/24/05 - FINANCE - BILL 050792 office to assist in funding material that we would distribute for free. Beyond that, we are dramatically increasing our Public Education Campaign through the media to get the word out to turn down the thermostat, tell people about the benefits of weatherization, explain the availability of our low-income programs, as well as budget billing, explain the availability of LIHEAP, make sure that everyone understands the availability of the various resources. We are trying to raise the visibility of our efforts in this area to bring in members, for example, of the Eagles, other celebrities, just to help get the word out. And we're also coordinating with the Mayor's office. There was a meeting this morning with various advocates, social service agencies and City agencies to discuss this problem and how we can all work together to get the message out and make 10 10/24/05 - FINANCE - BILL 050792 sure that people stay warm this winter.
Thank you very much. Would you please address the LNG plant, what that budget is and any security concerns that may be related therein?
I'll do my best on that front. As far as the budget, at present, we spent somewhere around $2 million in the development of our LNG initiative. The purpose of that is obviously to bring a very large volume of gas into the Midatlantic region, and, of course, our hope and our expectation with that amount of supply coming into the region, it certainly will have an impact, a downward pressure on price, and that's what our expectation is. With respect to the security issues, as we have said on a number of occasions and we will continue to say, we are working with a yet-to-be-named developer. When I say "yet to be named," 11 10/24/05 - FINANCE - BILL 050792 we are still in an environment of confidentiality. This party will be experts in, obviously, the ship channel aspects of the project. And from a security standpoint, there will be a Coast Guard review. There will be a Federal Energy Regulatory Commission review. As part of that review, there will be interaction with the Police and Fire from the City of Philadelphia, and obviously the community will be involved in the FERC process as well. We haven't yet gotten to that stage in our process. Where we are at the present time is, we're dealing with a very sophisticated, very complicated negotiation, but we are at the point now where we are exchanging contractual drafts and we are expecting marked-up red-lined copies of agreements that we have submitted to the potential developer.
Would 12 10/24/05 - FINANCE - BILL 050792 you please respond to concerns with regard to a PECO merger and how that could affect rates in Philadelphia?
Well, with respect to a PECO merger, I think PGW has been party to conversations that discuss the notion of combining PECO's gas division with PGW's gas division. Maybe I should ask for this clarification. There's the Exelon merger with PSE&G, which we have intervened, along with the City, and then, of course, there's the notion of merging possibly PGW with another entity. Obviously, the two are inextricably tied in a lot of the discussions that are going on, but with respect to the Exelon merger, we've been an intervenor, and we have been in the process from its inception, and we have built our case on expert testimony pertaining to market power and things that would not be in the best interest of the citizens of Philadelphia.
The 13 10/24/05 - FINANCE - BILL 050792 issues you mentioned with regard to the LNG, do they also relate to overall emergency preparedness?
With respect to the LNG, we are focusing our business continuity initiatives right now on our gas processing plant, particularly Richmond. What I mean by that is, in this post 9/11 world, you have to be prepared for -- not only do you have to have the proper security, but you also have to be prepared that in the event of any type of incident, you can continue to provide service. And we've taken some steps forward with business continuity, and what that is, it's an overall plan to address how PGW would react to a failure or an interruption of service over at our Richmond facility. So we have been working on that and we will continue to work on that.
Thank you very much, Mr. White. Are there questions from 14 10/24/05 - FINANCE - BILL 050792 members of the Committee? (No response.)
Seeing none, the Chair would like to recognize Councilwoman Tasco, unless we do this in our meeting part. Do you want to do this in the meeting part? You have amendments?
If there are no other questions, is there anyone else here who would like to testify? (No response.)
Seeing none, this will end our hearing part of the Committee. We will enter the stated meeting part of the Committee, and the Chair recognizes Councilwoman Tasco.
Madam Chair, I offer amendments to Bill 050792. (Duly seconded.)
It has 15 10/24/05 - FINANCE - BILL 050792 been moved and seconded that amendments to Bill No. 050792 be adopted. These amendments have been circulated and received by all members of the Committee. Are there any questions? (No response.)
The ayes have it, and so the amendments to Bill 050792 will be adopted. The Chair recognizes Councilwoman Tasco with regard to a motion on the bill as amended.
Madam Chair, I move that Bill 050792 as amended be reported out of Committee with a favorable recommendation. (Duly seconded.)
Do you 16 10/24/05 - FINANCE - BILL 050792 want a suspension of the rules?
The ayes have it, and so Bill No. 050792, with amendments as adopted, will be reported out of Committee with a favorable recommendation and a recommendation that rules be suspended so as to permit first reading at our next session of Council.
Thanks. (Committee on Finance adjourned at 2:50 p.m.) - - - 18 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on October 24, 2005, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)