COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON LAW AND GOVERNMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, March 20, 2007 3:10 p.m. - - - PRESENT: COUNCILMAN WILLIAM GREENLEE, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN JAMES F. KENNEY COUNCILMAN FRANK RIZZO COUNCILMAN W. WILSON GOODE, JR. BILL 070117 - An ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to Article VIII, Chapter 5 of the Philadelphia Home Rule Charter, entitled "Referenda Approved by the Voters," by adding a new section providing that the citizens of Philadelphia urge the Pennsylvania Public Utility Commission to deny the Philadelphia Gas Works' 2006 Request for a Base Rate Increase... RESOLUTION 070129 - Resolution proposing an amendment to Article VIII, Chapter 5 of the Philadelphia Home Rule Charter, entitled "Referenda Approved by the Voters"... - - - 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, everybody. The Committee on Law and Government is now in session. I would ask Mr. Boyle, the Clerk of the Committee, to read the bill 7 and resolution before us today, please.
Ordinance 070117, an ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to Article 12 VIII, Chapter 5 of the Philadelphia Home Rule Charter, entitled "Referenda Approved By the Voters," by adding a new section providing that the citizens of Philadelphia urge the Pennsylvania Public Utility Commission to deny the Philadelphia Gas Works' 2006 request for a base rate increase; fixing the date of a special election for such purpose; prescribing the form of ballot questions to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for the special election. 3 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Resolution 070129, Resolution 3 proposing an amendment to Article VIII, Chapter 5 of the Philadelphia Home Rule Charter, entitled "Referenda Approved By the Voters," by adding a new section 7 providing that the citizens of Philadelphia urge the Pennsylvania Public Utility Commission to deny the Philadelphia Gas Works' 2006 request for a base rate increase.
Thank you. For the record, present are Committee members Councilman Kenney, who is Vice-Chair of the Committee, Councilman Rizzo and Councilwoman Blackwell, who is the sponsor of this bill and resolution. I have a number of witnesses. If I just respectfully ask as we start if there are people who have written testimony, they can make that part of the record, and if they could summarize their statements, it would help the Committee 4 3/20/07 - LAW & GOV'T - BILL 070117, ETC. move along and people not to have to wait too long to testify. First on my witness list is Mr. Vincent Jannetti, Acting Director of Finance. Good afternoon. If you could identify yourself for the record, Mr. Jannetti, and proceed, please.
Sure. I'm Vince Jannetti, Acting Director of Finance to the City. Good afternoon, Councilman Greenlee and members of the Committee on Law and Government. I'm Vince Jannetti, as I just said. I'm Acting Director of Finance and a member of the Board of Directors of PFMC. I'm here to testify on Bill No. 070117. This bill will provide for the submission to the electors of the City for an amendment to Article VIII, Chapter 5 of the Home Rule Charter. And I'll skip the rest. Although the impact of the proposed Charter change is largely 5 3/20/07 - LAW & GOV'T - BILL 070117, ETC. symbolic, the Administration nonetheless is hereby to testify in opposition to Bill No. 070117. Since 2000, PGW, under the direction of the Administration, has worked to stabilize PGW's operations and to assure the residents and businesses in Philadelphia have safe, reliable gas service. The Administration has also insisted that those managing PGW do so efficiently, reducing outside contracting, reducing the size of the staff and controlling healthcare costs and increasing collections. In order to avoid simply passing on to paying customers costs associated with those unable to afford the cost of gas, the City has worked closely with PGW management to increase state and federal support for low-income customers. Despite these measures, PGW needs additional revenue if it is to continue to provide reliable, safe gas service, make up for lost sales and rising costs and to begin to be able to 6 3/20/07 - LAW & GOV'T - BILL 070117, ETC. pay down their huge amount of debt and/or to do pay-as-you-go capital financing. The company also needs to maintain its bond coverage covenants and to maintain its access to capital markets for future capital needs and short-term operating funds. In addition, the company is required to pay the $45 million loan to the City in Fiscal 2009. Barring the company from raising rates would potentially require the City or some other public entity to step up to cover revenue shortfalls of PGW. The City's proposed FY08 to 2012 Five-Year Plan is precariously balanced. The fund balance at June 30, 2012 is projected at $47 million in the Plan. There are no provisions in same for employee wage increases or increases in employee health and welfare costs, rising prison population, just to name a few of our looming cost challenges. In addition, our ability to generate 7 3/20/07 - LAW & GOV'T - BILL 070117, ETC. additional tax revenues is constrained, especially as we are taking out 1.7 billion in revenues over the life of the Five-Year Plan. The City has also foregone or granted back to the company the annual $18 million payment and does so for the life of the proposed Plan. These factors make it impossible for this government to commit any additional resources to PGW. Thank you for the opportunity to testify. I'd be happy to answer any questions.
Thank you, Mr. Jannetti. If the record could also reflect Councilman Goode is present. Mr. Jannetti, just a question. You have in your testimony the impact of the proposed Charter change is largely symbolic. If this Committee passed it, Council passed it, it went on the ballot, passed, what direct effect would you think it would have on the PUC? 8 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
Okay. Any other questions or comments from the Committee? (No response.)
The next witness I have is Lance Haver, please. Good afternoon. Identify yourself for the record, please, and proceed.
Good afternoon, Mr. Chairman. My name is Lance Haver. I'm Director of Consumer Affairs for the City of Philadelphia and I want to thank you for this opportunity to testify before you and for your interest in protecting Philadelphia consumers. Let me start out with the obvious. Philadelphians have seen their gas bills skyrocket in the years since 9 3/20/07 - LAW & GOV'T - BILL 070117, ETC. President Bush has taken office. The average bill in the 2002-2003 heating season was $900. This year it will be almost 2,000. At the same time, the federal government has refused to tie the annual LIHEAP and Crisis grants to the price of heating oil or natural gas. The overwhelming majority of Philadelphia families have not seen their income increase to keep up with their utility bills. Forcing struggling families to pay more would make a bad problem worse, and asking those who can keep up to keep paying more and more for those who, through no fault of their own, cannot is wrong. The skyrocketing bills have been driven by the price of natural gas at the well, not the Philadelphia Gas Works. Under the Bush energy plan, natural gas has more than tripled. As approximately 50 percent of our bills are the cost of natural gas, a 200 percent increase at the well leads to a doubling 10 3/20/07 - LAW & GOV'T - BILL 070117, ETC. of the gas bills. In truth, had PGW, this Administration and Council done nothing, the bills would be even worse than they are now. To help the public keep their bills within reach, Council and the Administration have taken very positive steps. The Administration and Council have stopped collecting $18 million from the Gas Works every year, a charge that was the equivalent of the sales tax. The City has also loaned PGW $45 million in an effort to keep gas bills affordable. PGW, the United Way and the City have conducted literally hundreds of free workshops showing consumers how they can conserve energy. New loan programs have been established by the City to help consumers purchase new heaters. PGW has weatherized literally thousands of homes. In addition, PGW has aggressively helped consumers apply for LIHEAP and Crisis grants and enrolled families in the CRP programs at historic levels. 11 3/20/07 - LAW & GOV'T - BILL 070117, ETC. The Administration and this Council have installed professional management at PGW. Collection rates and efficiencies are up. It was not that long ago under the old management team that PGW had a billing computer that did not work and was literally giving ratepayers' money away. Under the old management, PGW was making two types of decisions, bad and worse. All three of the previous managers were indicted for stealing from the Gas Works. We have come a long way since Mr. Hawes decided to spend ratepayers' money on golf outings and his alma mater. Mr. Martin decided to spend our money on our security system and Mr. Sherbut fraudulently submitted his resume. But we have not solved the most pressing problem, ones that are not the City's or PGW's fault but the fault of the Public Utility Commission. That is the problem of paying for those who cannot keep up with the skyrocketing 12 3/20/07 - LAW & GOV'T - BILL 070117, ETC. bills, and how can PGW pay for higher labor and healthcare costs when we are teaching people to use less? I know there will be some who will question my judgment by pointing out that the Street Administration appointed me to this position. All I ask is that you consider on occasion I have testified here against positions the Administration was advocating. I opposed the surcharge on gas bills that PGW requested three years ago. I opposed the last water rate hike. I testified in opposition to the cuts in the business privilege taxes, as I think Councilman Kenney will recall, and most recently testified in favor of removing Wachovia from the list of appropriate depositories.
I believe that PGW needs more money in part because the City of Philadelphia runs the most comprehensive and affordable low-income plan in the state; in part because as we conserve, the overhead PGW collects on sales isn't 13 3/20/07 - LAW & GOV'T - BILL 070117, ETC. enough; and in part because of rising labor and healthcare costs. That is why I believe both statements are true: Many people cannot afford to pay any more and PGW needs more money. If the Public Utility Commission treated Philadelphians fairly, it would spread the universal service charge, which pays for those who cannot keep up, across the entire state. As of now, the PUC forces Philadelphians to pay a disproportionate share of those costs. The PUC in an intellectually dishonest way says we should all bear the burden for those who cannot afford utility service and then orders it placed most heavily on those who live next to the lowest income consumers. No honest interpretation of the facts would excuse the red lining that the PUC has engaged in over the last 20 years. What makes it worse is for the least expensive utility, phone service, 14 3/20/07 - LAW & GOV'T - BILL 070117, ETC. the PUC spreads the universal service charge across the entire state, but for the most expensive utility, gas, it forces the burden of the universal service charge on the smallest area possible. The PUC is like many practitioners of the right wing agenda: It gives the benefit of society to the rich and the burdens of society to the poor and working people. The PUC purposely places the burden of those on limited and fixed incomes and the working poor on Philadelphia alone and allows the other citizens in the state to pay far less of a universal service charge than Philadelphians pay. As a result, the Gas Works and the City of Philadelphia find itself facing a dilemma, people cannot afford to pay more and PGW needs more. To make it even clearer how little the PUC cares about the needs of poor and working people, examine how much time and energy they spend promoting 15 3/20/07 - LAW & GOV'T - BILL 070117, ETC. renewable energy and how little time they spend promoting conservation. The PUC has established four different funds to fund renewable energy. There is not a single fund to support conservation and weatherization. If the PUC really cared about helping people conserve, they would run a national competition for the most efficient method to weatherize a home. If the PUC were to act justly and share the burden across the state, there would be no need to raise the bills in Philadelphia. I fear that unless the ballot question is worded in such a manner that demands the PUC do both, keep people's bills down and ensure that PGW has the funds it needs to operate safely and efficiently, we will be letting the PUC continue to ignore the needs of Philadelphia. I strongly recommend that you amend the wording to reflect both needs. In addition, I urge Council to 16 3/20/07 - LAW & GOV'T - BILL 070117, ETC. intervene in the rate case with the specific demand that the PUC establish a statewide universal service fund. We should no longer remain silent as the PUC red lines the City. And, Mr. Chairman, Councilman, your question prior, the fear I have in this ballot question is, it let's the Public Utility Commission off the hook. Instead of putting their feet to the flames and making them come up with a better solution for us, to allow them to look like heroes when in reality what they're doing is red lining against the poorest of the poor, to me doesn't make any sense, and that's why I am concerned. It's not enough for the Public Utility Commission to simply say no. They have to come up with a long-term solution, which means spreading the burden of those who can no longer pay across the entire state and developing a conservation program that makes sense for the City of Philadelphia. 17 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Thank you.
Thank you, Mr. Haver. Just on that point, would the Public Utility Commission be the ones that can do it? Can the Legislature do that? I mean, does the Legislature have to fund that in some way? How does that work?
The Legislature certainly could do it, but it's not going to do it until the Public Utility Commission acknowledges that it's a problem. I'm not suggesting there's an easy solution for you. I recognize you want to protect ratepayers. The problem is the level of poverty is so great and the price of natural gas has gone up so high, despite the best intentions and the better management of PGW, we really face a dilemma. People can't pay and PGW needs more money.
Has the PUC ever been directly approached on this 18 3/20/07 - LAW & GOV'T - BILL 070117, ETC. yet?
They have. They ran an investigation of what to do about the low-income plans and they had an investigatory hearing. I testified at it. It was written testimony. They did not find that there were a lot of people who were demanding a universal service charge, and what they did was acknowledge that the programs for low-income people were different in different regions but didn't address the funding mechanism.
I see. I know we had a conversation about this Friday, but I guess part of the problem is that the rest of the state would be resistant to want to say -- they're usually not real open to helping Philadelphia to start with.
I think you're absolutely right, but because this is going to be primarily a symbolic gesture in a way of delivering a political message, I can think of no better way to 19 3/20/07 - LAW & GOV'T - BILL 070117, ETC. say to the Public Utility Commission, You have an obligation. Whenever we want to have taxes that are graduated, we say, Oh, no, in Pennsylvania we can't have graduated taxes, we have a flat tax constitution. Well, why then is it we don't have a flat fee for universal service charge? Why is that allowed to be graduated if we can't have a graduated income tax or graduated business taxes? It makes no legitimate sense.
Okay. I certainly understand what you're saying. Just one question, and I know Councilman Goode and Councilwoman Blackwell want to ask a question. Do you have specific language that you -- you don't have to give it to me right now. If you wanted to think about that.
Because we have a few more people to testify, 20 3/20/07 - LAW & GOV'T - BILL 070117, ETC. obviously.
Thank you. I don't want to dominate the questions. Councilman Goode.
Thank you. I certainly agree that it's a great idea that we have a statewide universal service fund, and I am sure that my colleagues would support me in doing that. I just don't think it's one or the other, and that at this time, even if we call for a statewide universal service fund, we need to do something since the PGW filed in December, I think the 16th, 16th or 19th. I think 16th. They applied for a rate increase, and we need to do something. I don't think 21 3/20/07 - LAW & GOV'T - BILL 070117, ETC. they're mutually exclusive. I think we need to do something to certainly protect those now who can't afford to pay. Thank you for your commitment. I understand all that you say, and we agree with you on the service fund.
Thank you, Mr. Chairman. My questions are along the lines of the Chair and comments of Councilwoman Blackwell. I guess the first question is, it's not a matter of this ballot question as it's written being symbolic, but any ballot question would be symbolic in this matter. So do you think there should be a ballot question?
In the best of all worlds, I would rather you intervene in 22 3/20/07 - LAW & GOV'T - BILL 070117, ETC. the case and --
Well, it means I understand that you want to do something to protect consumers, and on the level of which is better, what I believe --
My question was, any ballot question would be symbolic. So based upon the fact that it would be symbolic, do you think that there should be any ballot question? Should there be a ballot question regardless of how it's worded? Because regardless of how it's worded, it would be symbolic.
I don't have any problem with symbolic ballot questions. I believe that we made the right decision in putting the ballot question on about Iraq. I believe demanding a statewide universal service charge would be a correct ballot question. I think there's a difference of what the question is. 23 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
Second question is, if you believe there should be a universal service charge, is that what PGW believes and is that what their request was?
I cannot -- that is not the request in this filing, and I cannot speak for them. I know that Mr. --
So the ballot question as it is constructed now, in essence, asks for the PGW request to be rejected, and if what we want is a universal service charge, then we will be rejecting PGW's request; would we not?
What we would be rejecting is that bills are held where they are and that the Public Utility Commission establishes a universal service charge to fund PGW.
The ballot question is very specific. It deals specifically with PGW's 2006 request for a base rate increase. And so if what we 24 3/20/07 - LAW & GOV'T - BILL 070117, ETC. want to move to is a universal service charge and that is not what PGW necessarily wants to do and that definitely is not what they requested to do, then we would be rejecting PGW's request and asking the citizens to reject PGW's request in favor of a universal service charge. So, in fact, it's possible the ballot question is worded correctly because we're rejecting PGW's request in favor of a universal service charge.
I understand your point. I would just respectfully disagree. Without putting the actual words "universal service charge" and forcing the PUC to establish it, I think that message gets lost.
Lastly, since you disagreed, do you actually believe it's possible to change the wording of this ballot question and still have it be valid?
I would bow to 25 3/20/07 - LAW & GOV'T - BILL 070117, ETC. greater wisdom. My understanding is, yes, there's time to do that.
Not time. Do you actually believe that you can change the wording of this ballot question to achieve what you're trying to achieve in terms of a universal service charge and have the question still be valid?
And so you believe that PGW's service request could actually contain the possibility of a universal service charge?
I think the answer is yes, but I'm not sure what you're actually asking. It already -- in the rate case is the universal service charge. It's just only borne by Philadelphians. It's not spread across the state.
So you actually believe that it could be spread across the state within the current 3/20/07 - LAW & GOV'T - BILL 070117, ETC. request to the PUC?
Yes. It's possible. I don't think it's likely, but it is possible.
Thank you, Mr. Chairman. Could you tell me, is there a way that if we're going to address this issue -- this is more than just about heat in the winter. I watched a TV show the other night about 1995, I think it was, in Chicago when hundreds of people died because of exposure to the heat. Would the universal service charge also be applicable to PECO Energy so we could have some assistance, because 27 3/20/07 - LAW & GOV'T - BILL 070117, ETC. obviously heat in the winter is probably above cooling in the summer, but would that apply to the electric utility for people that want to have some cooling in the summer?
The answer is yes, but technically we would have to wait until the transmission and distribution freeze is over. As part of the restructuring of the electric industry, there was an agreement by PECO that it would not file for any changes in its tariffs until the year 2010. So we would have to wait for that moment and then we could address that. Other than that, it would be very difficult to change the transmission and distribution charges, which is the only part of the bill that is regulated. As you know, the generation of electricity is no longer regulated.
So we would accomplish the universal service charge for the gas utility, but on the other 28 3/20/07 - LAW & GOV'T - BILL 070117, ETC. hand, if we have 95, 100 degree days, our seniors are keeping their air conditioner off, if they are fortunate to even have one. So we're not going to be able to help them until the year '10?
I believe that that's correct. It's unfortunate and I understand that you would like to help everyone, but, again, I don't think it's helpful for me to mislead you. This would set a precedent and then the precedent would go into effect.
Again, I agree that heat is probably more important than the cooling, because you could at least have fans and other things in the summer, but after seeing how deadly heat can be -- and we all know how deadly it is here in our own city -- that we ought to look at what we can do. You're telling me that you don't believe there's anything at all that the genius lawyers can do to get around this? 29 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
Well, I will tell you, I'm ill-prepared to answer that question. If you ask me to come back after I've had a chance to study it, I would be better prepared. As it is now, because there is an agreement that there will not be any change to transmission and distribution, I don't know right now if there's a way around it. You may be right, there may be a creative way to solve that problem, but I don't want to testify in front of you to suggest that I know something I don't know.
That's fair. I'm going to ask Mr. Hershey when he comes up that maybe he could shed some light on that, because I think if we're going to address this issue, we can take baby steps, but I would like to get the electric utilities on board also. Thank you, Mr. Chairman.
Thank you, Councilman. 30 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Any other questions? Councilwoman Blackwell.
I certainly wish I thought the state would help pay our bills, but I don't know if other counties would be willing to do that. Don't we wish? Thank you.
Thank you, Councilwoman. Mr. Haver, if I could just add, obviously this is Councilwoman Blackwell's issue and it would be up to the Committee, but if you could think of some wording, it's up to you. We'll have a little time.
Thank you, sir. Next witness, Steve Hershey, 31 3/20/07 - LAW & GOV'T - BILL 070117, ETC. PGW. Good afternoon. Please identify yourself for the record and proceed, please.
Good afternoon. My name is Steven P. Hershey. I'm Vice-President, Regulatory and External Affairs at PGW. I've previously distributed my testimony and an attachment, but before I begin the testimony and before I lose sight of it, there were a couple of issues that came up here that I'd like to address. And, yes, I think I can. It may be the first time on record that I've ever disagreed with Lance Haver, but I believe that he was wrong on the question that you raised. The Electric Competition Act provided for an exception that the distribution charges, under certain limited circumstances, could be raised if the utility requesting the change met certain criteria. So I think there is room to 32 3/20/07 - LAW & GOV'T - BILL 070117, ETC. make the kind of change that you requested if it's the sense of the Commission that it's appropriate. And related to that, PGW and a number of other utilities in Pennsylvania are in the process of looking at the question of statewide funding for a universal service program. There are a number of states that indeed fund such a program on a statewide basis in a manner that's very similar to the telephone universal service charge. The telephone universal service charge is one that is federally mandated, and if you look at your next land line bill from the telephone company, you'll see a surcharge of pennies each month that is designed specifically to create a fund for low-income customers to provide, in their terms, life line service and also to defray some of the costs of providing telephone service in remote rural areas.
That 33 3/20/07 - LAW & GOV'T - BILL 070117, ETC. obviously is an issue that's another day, but I just mentioned to my colleague, and she said that we would absolutely be willing and we'll ask you to point us in the right direction to get that information that you just stated, because I believe that the issue is as significant for the summer as it is in the winter and I think it's only fair that we address it across the board.
I agree with that. I think the difference in size between electric cooling bills and gas heating bills is disproportionate, but there are certainly ways to devise a formula that could address that problem. There was one other issue that I wanted to follow up on, if I might. Mr. Haver addressed the need for conservation and funding of adequate conservation programs. One element of conservation that is often overlooked is that to the extent that it reduces a customer's energy bill, in most cases 34 3/20/07 - LAW & GOV'T - BILL 070117, ETC. that is -- those are dollars that can be spent in the local economy. Instead of, for example, with the natural gas utility, sending those dollars to Houston or the Gulf Coast or the Middle East, the customer retains the dollars because the bill is lower and has that money to spend in the local economy, which creates jobs, which creates additional people who can pay their gas bill, pay their electric bill and pay for other commodities in Philadelphia. So there's a doubling and tripling of the impact of weatherization. Now I'll return to the testimony that I submitted. PGW understands the motivation for Bill No. 070117 and understands that many customers already struggle to pay, but PGW asks that this Committee reject the bill and seek an alternative solution. Without a rate increase, PGW will violate its bond covenants, will not be able to fund its operations, will not 35 3/20/07 - LAW & GOV'T - BILL 070117, ETC. be able to pay its bills and will not be able to borrow either long term or short term. Neither the customers nor the City nor the public interest would be well-served if that were to happen. I've attached a presentation, which many of you have seen previously, which shows clearly that since PGW's last rate increase five years ago, PGW has succeeded in keeping costs under control, in reaching out to protect vulnerable customers and in improving collections. That has not been enough. In the last seven years, the City has done more for PGW and its customers than at any time that I can recall, including the period when I served as Public Advocate from 1986 to 1998. That has not been enough. PGW has a low-income program that serves more than 75,000 customers, but we have no maximum number in that program and continue to conduct aggressive outreach for the program. PGW 36 3/20/07 - LAW & GOV'T - BILL 070117, ETC. has a low-income weatherization program and each winter conducts weatherization workshops around the City. This winter we funded 30 such workshops. That has not been enough. PGW needs additional funds for operations, for customer service, for safety and reliability. Right now we can get those funds only from our customers. PGW has been like the customer of the payday lender, not having enough to get to the next paycheck, so the solution is to borrow, but that only digs the hole deeper. We cannot keep borrowing. If the state or federal government provided funds for the capital program for safety and reliability, that would help. If the state or federal government provided funds to help customers who are vulnerable, that would help. And I should add that should those funds be made available on a recurring basis in an amount sufficient, we would drop the request for a rate increase in a 37 3/20/07 - LAW & GOV'T - BILL 070117, ETC. heartbeat. Recently, PGW and ACORN together asked the state for funds to help those vulnerable customers below 250 percent of poverty. The state responded with $500,000. It helped, but it was not nearly enough. PGW would like to work with Council and the Administration to find additional resources to meet PGW's need to keep the system safe and reliable without increasing the burdens for our customers. Thank you.
Thank you, Mr. Hershey. I know Councilman Kenney and Councilwoman Blackwell have questions. Just one question for me. To steal Councilman Goode's question to Mr. Haver, the universal service charge, was that considered as part of the rate request? Could you have put that in there as we asked you to consider this in lieu of an increase? I don't know if 38 3/20/07 - LAW & GOV'T - BILL 070117, ETC. that kind of thing can be done or has ever been done.
If we had done that -- the simple answer is, it was not, and the reason for that was that we were the only utility in front of the Commission on that particular case. In order to make the universal service fund work effectively for PGW, for its customers, for Philadelphia, the fund would have to be created on a statewide basis and, therefore, the funds would have to come from all of the utilities or from some other statewide mechanism. So having it only in our rate case would not have been effective.
Thank you very much. Mr. Hershey, you've been around this utility for quite some time and have seen a lot of different scenarios. I 39 3/20/07 - LAW & GOV'T - BILL 070117, ETC. just want to walk you through a potential hypothetical as it relates to this. Now, it's been stated earlier that this particular legislation and the ballot question that may generate is largely symbolic, but if the PUC decided that they wanted to listen to the voice of the Philadelphia taxpayer or ratepayer and decided not to approve the rate increase, what would happen?
Well, if they say, Look, the ratepayer of Philadelphia has spoken and we're going to give you what you want, what would happen?
PGW would violate its bond covenant. It would be unable to meet operating expenses, would essentially fail to operate unless there were some other source of funds to meet those needs. 40 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
What then would the responsibilities of the City and the state be as it relates to the delivery of this life-sustaining commodity in addition to the safety issues surrounding delivery of that gas and its capital needs? What would be both the City and the -- would the state have any responsibility or legal requirements to do anything and would the City have any? Could the PUC simply walk away and say, You're out of business, we don't care, we have no responsibility?
That's not an easy question to answer. The state and the City have certain obligations to maintain universal safe and reliable utility service for those who want it. The ability to discharge that responsibility could come in many forms on different schedules. It's not at all clear to me that it would be in any way timely or completely effective, and that's not -- I wouldn't put my eggs in 41 3/20/07 - LAW & GOV'T - BILL 070117, ETC. that basket, frankly.
I don't think it's a likely scenario. I'm having this kind of hypothetical exercise with you relative to just what the state's responsibilities are other than simply approving or disapproving rate increase requests.
I think the Public Utility's responsibility is to analyze the needs of a particular utility before it over whom it has jurisdiction and make sure that there are adequate funds to provide safe and reliable service at an affordable price.
Mr. Hershey, are you telling me there's no precedent anywhere in the United States of America where a utility has gone belly up and the feds or the state haven't taken it over 42 3/20/07 - LAW & GOV'T - BILL 070117, ETC. and operated it?
Let me be clear. First, we're talking about Pennsylvania law. I believe that there are a number of utilities that went bankrupt and provision was made to meet the operating needs of those utilities. In all of the instances that I can think of at the moment, those were privately owned corporations. PGW is not incorporated. It's a collection of assets owned by the City. We can't go bankrupt. Would the City step up? Mr. McPherson or Mr. Jannetti might be better capable of answering that question than I.
Well, I'm fairly confident that there would be a mechanism if you guys got into distress where you say you would be that the state government, like Councilman Kenney said, or the federal government wouldn't come in, whether it's a professionally owned utility, a municipally owned utility. 43 3/20/07 - LAW & GOV'T - BILL 070117, ETC. You don't have a button in the control room and put it on auto pilot.
I don't disagree with you. Somebody would find resources somewhere. It would be a monumental crisis and there would have to be some response from government, whatever the government that is. The question is would it be effective, would it be timely, would it -- I think we're entering into unknown territory there.
Well, it's something you have to discuss. And excuse me for interrupting and thanks for bringing that up, Councilman.
I just want to entertain one other scenario. If this comes out of Committee, it's probably not going to be eligible for the May ballot, which means it would be on the November ballot. You guys have filed already your rate increase request. When are they scheduled to make the 44 3/20/07 - LAW & GOV'T - BILL 070117, ETC. decision on it?
That would be after when we'd have to put it on the ballot.
The rate increase would be decided prior to any vote on this ballot question?
Am I incorrect in saying that this has no 16 chance of getting on the May ballot?
I believe, Councilman Kenney, if this Committee passed it and it was passed at Council a week from Thursday, if the Mayor signed it immediately, like within a day or two, it could. It could. I believe that meets the 45-day rule. So, I mean, to answer your question -- now, if you're talking 45 3/20/07 - LAW & GOV'T - BILL 070117, ETC. realistically, you heard the Finance Director's testimony. Is that likely to happen? But, I mean, realistically I think it could in pure numbers, number of days, yes.
I don't want to be misunderstood on one point. I think most of you know me and know current management at PGW. We understand the difficulty that many of our customers face right now. We're doing what we can to address that. I think we've done more than any prior management that I can remember in finding ways to help customers, but first of all, as Mr. Haver mentioned, we inherited a situation that was, shall we say, difficult and then there was the increase in gas prices, which was what really exacerbated the situation. But for that increase in gas 46 3/20/07 - LAW & GOV'T - BILL 070117, ETC. prices, the situation would be very, very different. Having said that, what we've put forward in the rate case is something that will do what people have asked us to do, and, that is, fix PGW. Over the five-year span of time in our projections, PGW will become healthy, will wean itself from constant borrowing, and that means that costs for consumers will be less. Borrowing dramatically increases the cost of operation. If there were state or other responsibility for either the safety and reliability program or the universal service program, we could see a drop in rates that would be larger than the increase in rates that we're asking for. And then you've got a healthy utility that is able to serve the City and its customers and affordability. That's what we're looking for.
Thank 47 3/20/07 - LAW & GOV'T - BILL 070117, ETC. you. Councilwoman Blackwell, please.
Thank you very much. Mr. Hershey, I heard you talk about fixing PGW, but I don't know whether or not you have assessed how many fires we have in the City of Philadelphia today. Just as we turn on our TVs and we see incidents of crime, we see fires. We see families getting burned up. People who didn't know the Fire Commissioner a year ago know his face now because we have fires. Just three weeks ago I stood with Wal-Mart. They're giving me detectors in an area from 50 to 52nd, from Baltimore to Larchwood because of the fires in that area. There are fires every place. So has the City acted in an emergency fashion? Of course they have, because we pay for firemen and we pay to try to help people and we pay through our homeless system and every other way, but 48 3/20/07 - LAW & GOV'T - BILL 070117, ETC. it's bigger than us sitting here talking about a rate increase. It's about the emergency system we have with people with fires, people who are using illegal hook-ups. We see it every night on the air, people who use these plugs and they put in too many different cords in one of these extended plugs and people who have to use kerosene heat and people who don't have heat and people who freeze to death. I mean, it can't be -- we can't sit here and say, yes, we can fix PGW for once and for all at the cost of human life. We can't do that. That's what it's about. We all have to give some. We appreciate what PGW has done. I'm not denying that PGW has done more than we've ever done, but I am saying that we can't continue to turn on our news every night and see people and families and children and seniors who lose their lives because of illegal hook-ups, because of kerosene and because of all these other reasons. 49 3/20/07 - LAW & GOV'T - BILL 070117, ETC. And, finally, if you cut off, people don't have a thousand dollars for a shut-on. I would venture to say that if you would compare -- I know that people are not getting their gas turned on as much as they did before. They can't, because people don't have a thousand dollars once they're shut off to shut on. And I really think that is the wrong way to go. I don't think that you should charge people a thousand dollars reconnect service. They can't pay it. They won't have it. And those families as well are forced into illegal ways to provide heat. They're forced into kerosene heaters. They're forced into plugging in in ways that make their homes dangerous, because people, if they had a thousand dollars, they wouldn't have gotten shut off in the first place. So that is not the way to go. Charging people a thousand dollars for a reconnection fee just doesn't do it. And then if people do everything, they do bad 50 3/20/07 - LAW & GOV'T - BILL 070117, ETC. checks, they do everything and they end up in the same place, and they can't get reconnected because they don't have a thousand dollars. Once we get through this cold phase and then people who are off, they won't get back on, and then they go through the summer and then they worry about the fall and we're right back here, and it only gets worse. I would venture to say PGW is going to lose more money because when it comes to reconnection charges, when it comes to those people off, they're not going to get back on. You'll lose more customers and we will increase the suffering because people can't afford to pay the freight. So I'm happy to talk about all this stuff and the paperwork, but it comes down to the front line, and that's people in the City suffering, the fires and people being able to survive. That's where we are. We're at a survival mode, 51 3/20/07 - LAW & GOV'T - BILL 070117, ETC. and I think that's what it has to all be about.
Councilwoman, there's not a member of senior management at PGW who doesn't open the paper every single day during the winter with dread for exactly the reason that you described. We are very, very sensitive to that issue. And --
They can't fix PGW, Mr. Hershey. They can't fix PGW.
I know that, but the problem is when you waive certain costs, when you allow people to pay less and you're a utility and you only have one source of funds, then what we're doing is increasing the burden for other customers, many of whom are also low income or working poor.
And that I hate most of all. I listen to it on the radio. You always say somebody, 20 percent of our bill is for our 52 3/20/07 - LAW & GOV'T - BILL 070117, ETC. neighbor. We always try to unfairly make people angry because they're paying for the next guy. You do it every time we get to the point in this discussion. You got to pay for the next person. I don't mind paying for a senior on my block if it comes down to that, but it always comes down to saying, If we don't do this, then you got to pay for other people. Well, life is such that that's just the way it is, but I think it's unfair to tell people who are struggling that you have to pay for the person who has nothing, so we make people angry at other people and then they look for somebody living wrong or some poor income family or somebody they like to say on Section 8 who is hanging out on the street, living wrong, and they say, I got to pay that person's gas. I think it's unfair to use that line of defense. I've always resented it. I resent it now, that when we enter in debate, we say, If you don't pay, 53 3/20/07 - LAW & GOV'T - BILL 070117, ETC. you're paying for the next person. I think it's grossly unfair. I hear it and accept it because I have no choice, but I totally disagree. I think it's unfair and I think it borders on being immoral.
The solution is to spread the cost over a larger base, and that's what Mr. Haver was suggesting.
The solution is to spread the cost over a larger base and in a manner similar to what Mr. Haver suggested.
Do you think that PUC will permit the rest of the state to pay our freight? Do you think the other counties will agree to pay or those on PUC? Do you think they will agree to do that?
Well, I think their first reaction would be pretty 54 3/20/07 - LAW & GOV'T - BILL 070117, ETC. negative. I think that if we don't ask, we're not going to get it. And I think that we have to start -- there's already precedent in other states. There's already precedent in the telephone industry, and we need to start pushing that or other solutions that spread these costs over a larger base.
Just to follow up on my colleague's question. The charge, is that a manufactured number just to discourage people from being terminated? Because I think I have a little understanding of the process and it's not a thousand dollars worth of labor to dig up the street, if even that extreme is required to do a reconnection. So where did the thousand-dollar number come from?
I don't know. I don't know. It's not a thousand dollar -- I mean, there may be customers 55 3/20/07 - LAW & GOV'T - BILL 070117, ETC. who end up paying a thousand dollars. I know if the street is dug up, the charge is $423, plus if you're on CRP, you have to pay the missed CRP payments and you're on. If you're not on CRP, you have to make a payment arrangement. It varies with the level of income.
Why would you go to that extreme? If there's a turn-off, why don't they just lock the meter?
Why don't we just lock the meter? If we can get into the house --
In my house the meter is inside. In new construction the meters are outside. If we can get into the house, we will shut off at the meter, unless they bypass the meter with a rubber hose or some other device, then the meter isn't just turned on. There are many 56 3/20/07 - LAW & GOV'T - BILL 070117, ETC. times when we can't get inside the house and have to turn off at the curb if there's a valve at the curb, and then it's relatively simple. If there's no 6 valve at the curb, we have to dig up the street. The reconnection fees such as the dig fee are actually a discount off the actual cost.
Could you send to the Chair the schedule of fees for those services so we can see exactly what's what here?
Mr. Chairman, we had this discussion last year when we talked about rate increases, and we can even refer to our former testimony to get these fees. That's where I got it from, from PGW's testimony.
I will provide that. I should also add that it was this issue of reconnection fees that prompted PGW and ACORN together to go to the state to ask for the money to assist those 57 3/20/07 - LAW & GOV'T - BILL 070117, ETC. customers who were off, and that was, again, a way of bringing in additional resources to solve a problem, and I think that's the way to go in solving these problems.
Thank you, Councilman. Any other questions or comments for Mr. Hershey? (No response.)
Our next witnesses -- and I ask all three to come up at the same time so we can keep moving -- Pedro Rodriguez from Action Alliance, DeBorah Giles and Josephine Blow. If the three of you could approach the witness table together so we can kind of keep moving. And, again, if you have written testimony and have submitted it or would like to submit it and want to paraphrase your remarks, that would be 58 3/20/07 - LAW & GOV'T - BILL 070117, ETC. certainly fine. Mr. Rodriguez, you're first. I think you know how this works. Please identify yourself for the record and proceed, and welcome here.
Thank you, Councilman. Good afternoon, members of the Committee. Before I begin my statement, my name is Pedro Rodriguez. I'm the Executive Director of the Action Alliance of Senior Citizens. I'd like to take this opportunity on the record to thank those of you members of the Finance Committee for the actions yesterday. I think the citizens of Philadelphia feel really good that they have come to City Council to get some level of accountability done and it has worked so far. So we're really pleased about that. And just before I begin my remarks I submitted, my written testimony, Councilman Rizzo's question regarding the unfortunate tragedy that happened in Chicago back in the mid '90s 59 3/20/07 - LAW & GOV'T - BILL 070117, ETC. where thousands of seniors died over exposure to extreme heat, that is a concern that still in Philadelphia we're not prepared to deal with a similar situation. And the ironic thing that happened in Chicago back in '95 was that those individuals, those seniors who died, their bodies were then placed into refrigerated trucks that the City of Chicago hired from meat packing plants. So the ironic thing, that they got the call after they were dead. Similarly, I think in my testimony I will talk about the potential for discussing a situation that happened with extreme weather cold in Philadelphia due to the request here at hand. The Action Alliance of Senior Citizens urges the Committee of Law and Government and City Council to pass this proposed ordinance. It is critical that the citizens of Philadelphia be provided the opportunity to register their views on a proposed rate increase which, if 60 3/20/07 - LAW & GOV'T - BILL 070117, ETC. approved, will result in more Philadelphians being denied a service which is fundamental necessity of life, to heat their homes, get hot water and provide fuel for cooking. The health of many Philadelphians, many extremely vulnerable, will be negatively affected. There will be more service terminations, more vacant houses and more homelessness. PGW proposes to raise residential customer rates by 100 million starting in October 2007. 3 percent increase for the residential customers. According to PGW, this increase will raise the average annual bill by $113 per month from 1,728 to 1,884 per year. Really, the increase is much larger because it is only a base rate increase. 08 for metric cubic feet. That is a 44 percent increase, if you look at it that way. PGW customers cannot afford 61 3/20/07 - LAW & GOV'T - BILL 070117, ETC. this type of increase. Many senior citizens and older low-income people living on fixed incomes or with low-wage jobs are being placed in the position of having to choose between utility bills and necessary food and medical expenses. The situation is made even worse because the PUC, supported by the Commonwealth Court, grandfathered PGW's historical senior citizen discount at percent. 12 Any senior turning 65 after September 1, 13 2003 has been precluded from receiving 14 this senior citizen discount ever since. 15 Increasing rates will only make 16 PGW bills more unaffordable for large 17 numbers of PGW residential customers than 18 they already are. According to PGW's own 19 numbers, in its PUC required cold weather 20 survey, it reported that it had terminated heat-related service mostly for non-payment to almost 37,000 customers in 2006. As of December 1, 2006, over 9,000 customers were still off, well over one half of all the 62 3/20/07 - LAW & GOV'T - BILL 070117, ETC. customers in the state who were shut off in 2006 and who were still without heat-related services, as Philadelphia accounts for more than half of all such cases in the state. Like its rates, PGW's payment agreement terms for shut-off customers also were prohibitive for these customers. Of these 9,000 customers, over 4,000 were known by PGW to be low-income households with incomes below 150 percent of the poverty level.
Countless others were lower income households with income below 250 percent of the federal poverty level. In addition, over 2,500 residential homes shut off during 2006 have become vacant by the time of the survey. PGW's services continue to be substandard. One of the reasons that so many heating customers are without service as the cold weather approaches is that PGW insists upon payment terms which are totally beyond the reach of many customers. In their efforts to deal with 63 3/20/07 - LAW & GOV'T - BILL 070117, ETC. PGW, customers often complain of receiving different justifications and numbers from different customer representatives. It is still often unreasonably difficult to get through to PGW on the telephone. PGW consistently answers less than 50 percent of telephone calls in 30 seconds, while the PUC standard will require PGW to answer 80 percent of those calls within 30 seconds. PGW has claimed that it needs such a large sum so that it will be able to substantially reduce long- and short-term debt over the next five years. Such a large increase is likely to push more customers into default. The end result will be that PGW will not make any inroads on its debt burden, but will continue to borrow money, increasing the need for more rate increases. PGW's rate increase request contains no guarantees at all that increased rates will lead to a reduction in debt. In addition, although PGW has waived the $18 million 64 3/20/07 - LAW & GOV'T - BILL 070117, ETC. City payment through 2010, PGW forecasts that it will make the $18 million payment in 2011 and 2012. That is not fair nor reasonable. The City is the owner of PGW. If the reason for the rate increase is to restructure PGW's debt, then the money to be used for restructuring should not be taken by the City. In conclusion, the Action Alliance applauds Councilwoman Blackwell for sponsoring this bill. She has brought this issue to the forefront where it rightly should be and receive the most urgent public attention. Thank you.
Thank you, Mr. Rodriguez. Just a quick question, and I know you followed this closely. That's why I ask this question. In your opinion, have you seen an improvement in the way PGW operates over the last couple of years?
There has been substantial improvement compared to what 65 3/20/07 - LAW & GOV'T - BILL 070117, ETC. was there before. I mean, that's without question. But I think more could be done, and I think that we're trying to strive for excellence, and I think it's still -- the customer service department still has a long way to go.
Okay. Thank you. Any other questions? Councilwoman Blackwell.
Thank you very much. I just wanted to say thank you. Thank you very much.
Thank you. Ms. Giles, please identify yourself for the record.
My name is DeBorah Giles. I'm a resident of University City. And I got my bill in the mail and I sort of got incensed about it. I was asked who do I represent, and the true question after I took a petition around my neighborhood, gave the formal 66 3/20/07 - LAW & GOV'T - BILL 070117, ETC. complaint forms to my clients, is, who don't I represent, because -- and I took the petition to restaurants, barber shops, the post office, and I would say about 98 percent of the people were against the rate hike. And my testimony points to two specific ideas. And I was listening to the recommendation about the universal fund and also we should conserve more. My testimony addresses the conservation, but it just occurred to me that these seem to be smoke screens. People I know have been conserving. We're not low income either. We're middle to, you know, moderate income. We're conserving and still paying more in our utility bills. So in terms of my testimony, I'd just like you to pay attention to those issues and then maybe pay attention also to maybe a suggestion about a resolution that puts the onus back on PGW to be a good manager and look internally in its operations to see where they can 67 3/20/07 - LAW & GOV'T - BILL 070117, ETC. cut costs or redo its procedures or policies in order to do something about these costs. Just saying we need money, we need money is like people complaining about the welfare system. And we're looking to them to be good executives and good managers. I wrote this to the PUC prior to their deadline to try to stop the rate increase. "I strongly object to the proposed rate increase. Not too long ago, in 2002, the Philadelphia Gas Works increased its base rates by $36 million. "At an energy-efficient seminar I attended just this past weekend, we were informed that PGW just increased its rates in October 2005 by 29 percent, and according to the PUC website, they are now asking for another 11 percent. "I am a tax accountant. My clients include businesses, individuals and seniors. Even though the gas company gave a small discount last year as well, neither category of taxpayers nor I have 68 3/20/07 - LAW & GOV'T - BILL 070117, ETC. yet been able to recoup from the increases. One particular set of clients I had leads me to question the efficiency and effectiveness of current PGW corporate policies and procedures. "In addition to preparing taxes, I assisted one particular elderly couple with bill-paying activities. The wife had Alzheimer's and the husband suffered from diabetes and related blindness. When I first started helping them with their bills, the gas payment averaged about $150 a month during the height of the heating season. After the first major increase instituted by PGW, which was around 2002, my clients' monthly bill shot up to a much higher monthly average. "After the wife died in June 2002, their son came home to take care of his father. He arranged for his father's account to be put on a budget plan for $50 a month. Their income would not qualify them for any subsidy program nor 69 3/20/07 - LAW & GOV'T - BILL 070117, ETC. did they need one. I was concerned because their average usage was higher than $50 per month and collecting less than the average bill due would cause a monthly deficit and may be difficult for them to pay at the end of the year. "Prior to the son taking over, the parents were very responsible and diligent about paying their bills in full. They hired me to make sure that even in illness their assets remained unencumbered. "This probably is not an unusual case. Nevertheless, my question to PGW and PUC is, if there had been proper analysis done regarding gas usage and payment history, how could a $50 monthly budget plan be established and approved for an account that typically paid $150 on the average a month even prior to the increase? "This is not the fault of the general public and nor should we be penalized for such oversights. PGW 70 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
management must review its procedures and look for practical and efficient ways to manage its bill-collection processes. This is a case where the customers were paying their bill but because of an erroneous budget plan may have been thrown into a situation of not being able to pay thousands of dollars at the end of the year. Consequently, both PGW and the customer would have deficit situations. "PGW management must make a commitment to effectively do its job. Incomes are not increasing as much as the increases for PGW. "Weeks ago I heard on the national news that currently the general public is negatively saving and that we have the worst saving habit since the Depression and one other time period. At first glance, one might say that this is due to overspending. I agree that people do consume a lot. However, my theory is that fixed costs have also risen to the point that in order for people to take 71 3/20/07 - LAW & GOV'T - BILL 070117, ETC. care of their basic needs like electricity, heat, food and just going to work, they have to take money from their savings. "My theory was reinforced at this housing efficiency seminar that I attended where we tried to see which conservation methods were around that we may not have tried yet. They showed that the average American family spends $1,500 a year in heating bills, and in the Northeast due to cold, many of us probably spend more than the average. "PECO went up 42 percent in 2005 and 12 percent in 2006. Recently, the water rates have been rising as well. Most job increases that anyone gets, if any, are only from one to three percent. Those that are not robbing Peter to pay Paul are taking money from savings. "I have been conserving heat, water and electricity since the 1970s and I still have to wear thermals at home to keep warm and to afford my utility bills. 72 3/20/07 - LAW & GOV'T - BILL 070117, ETC. We, the consumers, have to conserve and pay heating bills that are for many becoming unaffordable. What are PGW and other utilities doing to examine their respective operations and find monies internally, conserve on salaries and Board fees instead of trying to dump off all of their management inefficiencies on the consumers by way of increasing our rates? "Since I started writing this letter on the 6th, I heard on the local news that nine children had to be sent to Children's Hospital because they suffered from hypothermia. Over that weekend I was at an affair and several people told me about a woman and two children who died in a fire trying to heat their home with an alternative heat source. Something is wrong. Utility bills are too high. "I used to be a bank examiner and currently am the treasurer for two small community organizations. In each 73 3/20/07 - LAW & GOV'T - BILL 070117, ETC. case I have had to review operations policies and procedures and recognize and correct internal issues that needed to be redefined and changed. The effect was improved procedures for the management decision process, lower risk for the organization and better cash flow. PGW needs this kind of examination and/or audit. "To conclude, based on the above situations and experiences, I am against the rate hike for PGW. PGW must find a way to conserve money just as the consumer is making do with lower heat and higher bills. If not, then PGW and PUC will be directly responsible for more deaths due to hypothermia and/or fires because of alternative heat sources that are not safe, and I will go even further to say that based on the trend of low raises, disinvestment in savings and higher fixed costs, PGW must get a handle on its management to prevent the trigger toward a critically negative economic 74 3/20/07 - LAW & GOV'T - BILL 070117, ETC. " I want to thank you for taking this complaint into consideration, and I agree with putting it on the ballot.
Thank you very much. Certainly Pedro Rodriguez gave us details and statistics, and, Ms. Giles, yours is excellent, an excellent statement on what the issues are and where we need to look. Thank you so much for taking time, all of you who are here, from your schedules to be here today. Thank you.
Ms. Blow, could you identify yourself for the record and give your testimony.
My name is Josephine 75 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Blow. I'm the President of Chester Avenue Business Association, and I was really elated when I received that they wanted me to give a testimony on behalf of my constituents, which I'm in a very blight community with mostly people that are on Section 8. They are either low income and senior citizens. And I want to say something about the ballot before I give my testimony. I do agree that the question there should be on the ballot, but my question is this: Why can't they make it in layman terms and why can't the questions be put in the newspaper with an "i.e." and let it be expounded on what each question means? Because there are a lot of people that in my area, they are foreigners, they're from Africa, the Caribbean, Jamaicans, and a lot of them do not understand it. So I think that it should be put in the papers or either put on the ballot in layman terms.
Ms. Blow, 76 3/20/07 - LAW & GOV'T - BILL 070117, ETC. with all due respect, the way this ballot question is made, that's about the clearest I've seen most of them, to be perfectly honest with you.
What I'm saying is, most of the people surrounded in my community, they're from Africa and a lot of them even -- they don't speak English too well and, you know.
Like when it says "shall the Home Rule Charter be amended," that's the way it has to read to make it legal. And as far as putting it in the newspaper, I mean, obviously there are entities that advertise that. We can only control so much what's put in the media.
Okay. As I said, my 77 3/20/07 - LAW & GOV'T - BILL 070117, ETC. name is Josephine Blow. Please accept this letter as my written testimony regarding the above bill and resolution. As a Committee person for the 51st Ward and the 10th Division and as a senior citizen of Philadelphia, I strongly urge the Pennsylvania Public Utility Commission to deny the Philadelphia Gas Works' 2006 request for a base rate increase. This rate increase would be detrimental to our community and City at large. So many people in our city are already struggling with severe cost increases for services they receive now from PGW. It's unthinkable that this large utility company would ask for more money from the working class, the seniors on a budget, the one paycheck away from homeless, and the impoverished citizens of our city who are already financially strapped. People are falling through the cracks in the system at amazing rates. Not everyone can make more money to pay 78 3/20/07 - LAW & GOV'T - BILL 070117, ETC. these bills or qualify for heating grants. Where is the brotherly love? In the news lately in Philadelphia is the recent rise of house fires. People who cannot afford heating costs try to find alternatives to keep their families warm and fed, and it costs them an even greater price than affording gas prices, the lives of their families. Where is the brotherly love? The working class, the senior on a budget, the one paycheck away from homeless, and the impoverished of our city are out of options for supporting these unreasonable rate increases. Utility companies like PGW need to look for other lucrative alternatives to assist them in meeting the needs to service Philadelphia's citizens. We need gas service, but it shouldn't be at a price that costs people their lives or the lives of their loved ones, be the choice between eating or not or living indoors or not. Please, please, please, 79 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Pennsylvania Public Utility Commission, deny Bill 070117 and Resolution 070129 and show us your brotherly love. Ask PGW to examine and find other options for the sake of the people.
Thank you, Ms. Blow, and thank you, too, for coming out. Thank you for your excellent testimony. Thank you.
Thank you to all three. I have three other people on my list to testify. If they are here, they could all approach the table together. Ruth Adams, Allen Krigman and Mary Jenkins. Ms. Adams, if you could identify yourself for the record and proceed with your testimony.
Good afternoon. Ruth Adams, speaking for West Powelton 80 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Concerned Community Council. In regard to Bill No. 070117 and Resolution No. 070129, the West Powelton Community, 100 percent of them, denies the Philadelphia Gas Works' request for a base rate increase. As we speak, there are lives being lost in fires because some people cannot afford the high rates. Yes, there's help for those under the poverty line, but what about those who are 50 cents over? It is truly a hardship for many. Those who cannot pay resort to other measures for warmth and sometimes lose their lives. The outrageous bills received are incredible. Now contemplating another increase is unconscionable. This request should not be granted. Sincerely Elsie Wise, West Powelton Concerned Community Council, and Ruth Adams testifying.
Thank you very much, ma'am. Any questions? 81 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Councilman Rizzo.
One of the things that you know is going to be coming are the hearings. I believe there are four. And I think that as many people as humanly possible through your community association and throughout the City should be there, because let me tell you, those Commissioners are affected. They say they are not, but they are when there's a significant response to those hearings. So just keep that in mind. Newsletter or whatever, just make sure when it hits near home to get people out there.
Thank you, Ms. Adams and thank Elsie for us. Thank you, and the whole organization and neighborhood. Thank you.
Mr. Krigman, if you could identify 82 3/20/07 - LAW & GOV'T - BILL 070117, ETC. yourself for the record, please, and proceed.
Yes. I'm Allen Krigman, University City section of West Philadelphia, and I believe you have some documentation from me. I am a small-scale rental housing provider in the University City section of West Philly, but I want to assure you that I do not speak because this is going to be money out of my pocket. I can assure you that utility costs are ultimately borne by our tenants, and changing of utility costs also does not provide one housing provider any competitive advantage or disadvantage over the other, because essentially we're all subject to the same effects. So I'm speaking on a different basis. As a housing provider concentrated in a particular neighborhood, I'm in a position to give you some cost comparisons between what's 83 3/20/07 - LAW & GOV'T - BILL 070117, ETC. involved in heating some virtually identical buildings with oil purchased from private companies versus gas and natural gas purchase from PGW. And I believe that you have the figures. I'm not going to go over the exact numbers. I would be interested to know where those houses that you can heat for 900 bucks are, because nothing that I have even approaches that kind of money. I can't even supply my tenants with hot water for $900. The point is, I've got comparisons here of three buildings on a small side street that are virtually identical buildings and I've got two buildings on 45th Street that are essentially identical buildings. Each set is different than another. The difference between what it costs me to heat these buildings with oil versus what it costs me to heat these buildings with natural gas from PGW ranges -- and I gave you the 2005-2006 figures. These numbers 84 3/20/07 - LAW & GOV'T - BILL 070117, ETC. subtract out the cost of hot water. This is heating alone -- ranges from 90 percent more to heat with natural gas to 32 percent more to heat with natural gas. Either of those numbers is outrageously high. The question is, why does gas in this city cost so much more than oil to heat these buildings? The cost can't be due to intrinsic differences between the fuels. There must be some, but not at that kind of level. Nor can they be due to the differences in the infrastructure needed to deliver them. I realize that PGW has to maintain its pipelines, but these small oil companies have to buy these very expensive trucks to deliver oil and they've got to maintain storage facilities and so forth. I think that they've got to be comparable. And if some of the offsets are attributed to bad debt which PGW may have been forced to incur by shut-off 85 3/20/07 - LAW & GOV'T - BILL 070117, ETC. prohibitions and presumably long past questionable practices, I think this is a separate issue. In any case, it shouldn't be borne by PGW's present and future customers. What the differences actually demonstrate to me is the triumph of commerce in the private sector in a free market economy. Private companies have incentives to keep their costs low for competitive purposes while they're still netting enough money to pay their employees and to generate returns for their investors. PGW has no such incentives. The people of Philadelphia can't go anywhere else for natural gas, and converting gas heating systems to oil, dual-fuel electrical systems or who knows what's coming down the pike in a year or two represent more investment than most of the property owners in this city are prepared or able to make. Further, the organization that operates 86 3/20/07 - LAW & GOV'T - BILL 070117, ETC. PGW for this city -- and the City, of course, is the owner of the Gas Works -- does not compete for the franchise to provide gas to the public nor has it been under any serious threat of losing out to privatization, although both have been discussed.
I am a staunch opponent of excess government regulation and I certainly don't believe in price controls, but I do believe that one or the other of a competitive contract for a company to run the gas company, the gas distribution system for the City or privatization would ultimately be in the best interest of everybody concerned. Unfortunately, neither of those is on the table right now. What is on the table that can help right now is denying PGW its requested rate increase, because giving them that increase removes major real incentives for the management of the company and the rank and file of its employees to operate more efficiently. I 87 3/20/07 - LAW & GOV'T - BILL 070117, ETC. submit that denying the increase will have a more positive effect in the long run and, accordingly, urge you to pass this bill. Thank you.
Thank you. Ms. Jenkins, good afternoon. Please identify yourself for the record and proceed.
Good afternoon. My name is Evangelist Mary L. Odom-Jenkins, coming from Mantua Community Planners, Inc. My response to this resolution 22 is no. Reason being that I've seen sufferings this winter. I've seen homes burned down, children burned up, senior citizens walking around with blankets on 88 3/20/07 - LAW & GOV'T - BILL 070117, ETC. them, people having to leave their homes for no heat and to make the -- it just gave me a bitter taste. Down through the years, we have been suffering from this problem with PGW. I just want to say that, again, my response is no. We, many residents, of my neighborhood/community whom has asked me to speak on their behalf before this Council, the answer in my response to the request for PA Public Utility Commission is to deny the request for the Philadelphia Gas Works. Currently, people who use gas are struggling to survive. When the bill is paid, meaning gas, there is not enough money left to pay for essentials such as medications, special diets, paying a mortgage and other human needs. This problem with PGW, before I close out, has gotten very, very serious and we who don't interact with people every day who are less fortunate than some of us and who are suffering for the 89 3/20/07 - LAW & GOV'T - BILL 070117, ETC. need of food, clothing, shelter and a place to stay are suffering even greater. Senior citizens are afraid to turn on their gas at all, even to cook, because they don't have the money to pay this gas bill. I would like to see that PGW become more sensitive to human needs, not just capital, because we know America runs on capitalism. But when it comes to humanity, we are human beings, all of us are, and not dead beats, as PGW has once classified us as people who pay their gas bills. I want to thank you for listening to my testimony, and all we are asking is that live and let live. No 19 higher rate increase or any rates for PGW. Thank you for listening to my testimony.
Thank you, Ms. Jenkins. Councilwoman. 90 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
Thank you, Evangelist Jenkins, Mother of Mantua. And let me say, because I know the Chairman has one last speaker, I thank everybody for coming out. Just this past month -- and it was after this was in place or didn't happen because of it, but everybody I know in and around West Philadelphia got a big bill. At my mother's house, the bill was some 750 for a little teeny tiny house. Everybody I checked with -- when I had her meter checked, they said, Well, the house is tight, nothing is wrong anyplace, so it must be because your heater is old. It's that kind of -- and when I checked with family, relatives, neighbors, everybody I know got an increased bill. So I don't know whether it's that West Philadelphia was targeted for some area, but remember many, many years, I've been here before when the Blackwells got a higher bill 25 than everybody, when our bill was between 91 3/20/07 - LAW & GOV'T - BILL 070117, ETC. $980 and $1,200, and I'm talking 15, 20 years ago. So something is wrong, as has been said all day, and certainly we need to -- if there is a fix, as Mr. Hershey talked about, it needs to be on the inside, not charging people more money and people who can't afford to pay it, but finding out what's wrong some place else within the system or, as DeBorah Giles said, to try and improve their management mechanism to deal with issues that protect people. Thank you.
Thank you, Councilwoman. Thank you, all three of you, very much for coming. I believe we just have one. Mr. Christmas would like to put on the record a letter from another community association, I believe.
Good afternoon. This is a letter submitted by 92 3/20/07 - LAW & GOV'T - BILL 070117, ETC. Ms. Jacqueline Slaughter for the West Shore Civic Association. "Good afternoon, Councilwoman Blackwell and members of the Committee on Law and Government. My name is Jacqueline Slaughter, President of West Shore Civic Association. I am pleased to be here today to present testimony regarding Bill No. 070117 and Resolution 11 No. 070129. "This will allow for the following referendum question to be placed on the ballot: Shall the Philadelphia Home Rule Charter be amended to state that the citizens of Philadelphia urge the Pennsylvania Public Utility Commission to deny the Philadelphia Gas Works' 2006 request for a base rate increase? "Our West Shore community overwhelmingly agrees with putting this referendum question on the ballot. All the residents of Southwest Philadelphia stand united and join with the entire 93 3/20/07 - LAW & GOV'T - BILL 070117, ETC. City population when rights concerning the democratic process becomes an issue. Freedom to choose is a constitutional right and should not be taken for granted by anyone or any institution. I represent a community who struggle to survive on a daily basis. They are not financially rich. Yet they are rich and blessed in many other ways. As I walk the streets in my neighborhood, I heard the voices and cries of many people. Many seniors are living on fixed incomes and some families are just living above the poverty level. Many residences even opt out of getting basic necessities, food, clothes or medication, in order to keep their gas utility on. Any increase would indeed be detrimental to their quality of life. Reality is that no one can afford a gas rate increase and we must allow the citizens of Philadelphia voices to be heard on May 15, 2007. For this is the American way, democracy. "Thank you for the opportunity 94 3/20/07 - LAW & GOV'T - BILL 070117, ETC. to testify today."
If I may, while the Chairman is talking, I want to thank everyone who has testified. Obviously I like working with all of the folks at PGW. No, it's not about you. It's about the issue and about our responsibility. Lucien Blackwell used to say, Leaders must lead. We have a responsibility to do everything we can to protect the people of our city, and that's how I see my job and that's why we're trying to impose upon this Committee to push ahead. Thank you.
Thank you, Councilwoman. If you could just give us one minute, a couple members have wandered out in the hallway. So just give us a minute. Thank you. (Pause.)
The 95 3/20/07 - LAW & GOV'T - BILL 070117, ETC. hearing on the Committee on Law and Government is recessed. We are now going into the meeting of the Committee on Law and Government. The Chair recognizes Councilman Goode regarding Bill No. 070117.
Thank you, Mr. Chair. I move that Bill No. 070117 be reported out of Committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
It's been moved and seconded that Bill No. 070117 be reported out of this Committee with a favorable recommendation and that the rules of Council be suspended to allow reading at the next session of Council. All in favor please say aye. (Aye.)
Opposed? (No response.) 96 3/20/07 - LAW & GOV'T - BILL 070117, ETC.
The motion carries. The Chair recognizes Councilman Goode regarding Resolution 070129.
Thank you, Mr. Chair. I move that Resolution No. 8 070129 be reported out of Committee with a favorable recommendation. (Duly seconded.)
It's been moved and seconded that Resolution 070129 be approved by this Committee. All in favor please say aye. (Aye.)
The ayes have it and Resolution 070129 has been approved by this Committee. That concludes the business for today. Thank you very much. Good afternoon, everybody. (Committee on Law and Government adjourned at 4:55 p.m.) 97 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 March 20, 2007, 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.)