Well, I don't know. I know I, and I know a number of Councilmembers have been over the years raising the issue of why is this $18 million payment being made to the City. And the Mayor -- and the Mayor was Governor Rendell -- insisted on the payment. And all mayors before Governor Rendell insisted on it.
Absolutely. But if someone comes lately to correct the problems, I'm still going to thank them for correcting the problem. Past differences and past mistakes and past bad policies --
I agree with you, except that Mr. Knudsen at this late stage is still adopting the same policy of, I'd rather see PGW go down than to have to let in a 134 03/30/04 - TRANSPORTATION - RES. 040149, 040216 little daylight or a little activity from City Council. Mr. Knudsen does not own PGW, but he thinks he does. And as long as he feels that way about it, there's no help you can give to PGW, because even the good stuff is eaten up.
If I may, Councilman, let me raise a few other ideas. I apologize to you, sir. As many years and as great as a fighter you've been for the public and for the average person, I can't speak for Mr. Knudsen. I just can't answer for him. But I can tell you that --
Well, I'm suggesting that there ought to be somebody else in his work. He obviously is not willing to see any role for City Council. He's not read the Home Rule Charter, doesn't understand our responsibility and our insistence on carrying out our duties. We made pledges to the voters because it was our duty to do so. Under the Home Rule Charter we had to agree to accept responsibility. He wants to eliminate our share. I don't know 135 03/30/04 - TRANSPORTATION - RES. 040149, 040216 why, so I think of the worst possible thing. In view of the history of PGW, the answer seems to me if somebody's pushing Council out, that there's things he doesn't want Council to know about.
Let me just finish and then I'll try to address that last point with your permission.
I've gotten that point. The problems that have not turned around are the skyrocketing price of natural gas and the ever greater number of people living in poverty in Philadelphia. Here are the facts. Gas bills have gone up by almost 50 percent in the last two years. The income of the poor, working poor and even middle class has in real dollars been declining since 2000. On average, Philadelphia families have seen their income decline by 7 percent. Over 22 percent of the City is living below the federal poverty level. The problem should be 136 03/30/04 - TRANSPORTATION - RES. 040149, 040216 clear, how can people who are barely making enough to get by before, pay bills of almost 50 percent more when their incomes are dropping? They simply cannot keep up. What then should we do. Let's start with creating incentives for management and workers at PGW to perform. Compensation for PGW's management and unionized work force should be tied to efficiency bench marks. Unless we do that, there is little, if any, incentive for PGW to improve its practices. Private utilities use the profit motive to drive efficiencies. PGW can use the same motive to drive its work force. Council should look to help PGW increase its efficiency by doing a cost benefit analysis of combining PGW's meter reading, billing and collection with the Water Department. Both are City-owned, and combining them should save everyone money over the long run. PGW should be asked to amend its PUC filing to ask for the tools it needs to increase collections while at the same time keeping the winter moratorium in place. The 137 03/30/04 - TRANSPORTATION - RES. 040149, 040216 winter moratorium must be kept in place not only because it's the moral thing to do, but also because shutting people off in the winter will actually cost the City more than allowing people to pay what they can. Winter shut-offs mean water pipes will break, homes will be abandoned, real estate taxes will not be paid, the number of people using the shelter system will increase and eventually the City will have to pay to either board up the homes or knock it down or both. While saying that, I do not mean to imply that PGW should not go after those who can pay but are refusing to do so. They should ask the PUC for the tools to do it. PGW must be allowed to use its neighborhood offices for one-stop shopping for benefits as it stands now. As it stands now, there's no central location in the City to apply for all the federal, state and City programs to help low income consumers receive benefits like Earned Income Tax Credit, food stamps, LIHEAP, weatherization, and access to help escaping predatory loans. I believe this 138 03/30/04 - TRANSPORTATION - RES. 040149, 040216 Council should not only give PGW the right to begin to develop a one-stop shop to help our most vulnerable, but should help PGW do so. Every penny that we can bring in, every BTU we can serve, every burden we can make lighter for our citizens helps our citizens be able to pay their bills and make it possible for PGW to pay theirs. Council must also do whatever it can to convince our state and federal delegation that current energy programs are hurting, not helping, Philadelphia consumers and PGW. Pennsylvania is one of only two cold weather states that does not add anything from the state budget to the LIHEAP and crisis budget. We should. On a federal basis, we must ask our delegation to introduce legislation that will tie the annual LIHEAP authorization to the price of natural gas and heating oil. As it stands now, the federal government purposely allows gas and oil prices to rise to encourage more drilling, but it does nothing to protect those who, through no fault of their own, cannot keep up. No one should be 139 03/30/04 - TRANSPORTATION - RES. 040149, 040216 forced to freeze so that a handful of multi-national corporations can increase their profits. Instead, the LIHEAP authorization should be tied to the price of natural gas and oil.
When they go up, the amount of LIHEAP grant would increase in the same proportion. Funding for conservation programs should be dramatically increased and targeted to payment troubled customers. We should ask the Department of Energy to float weatherization bonds that can be paid for with the energy savings so that we can help everyone conserve and keep their gas bills down. And PGW should join with other utilities that are suing companies like Enron for price fixing and overcharging. Council can also help grow PGW's business clients. Whenever you grant a TIF or tax break or low cost loan, you should require the business enjoying those benefits to use PGW as their primary fuel for both heating and cooling. The more business customers PGW has, the less burden on its ratepayers. Let me just close with another idea, 140 03/30/04 - TRANSPORTATION - RES. 040149, 040216 and then if you have any questions I'll be happy to answer. Council should insist that PGW start to reward ratepayers who pay on time every month for months. A cost effective 7 incentive program would help create an 8 incentive for people to make PGW bills a 9 priority. 10 I thank you for your time and will 11 be happy to answer any questions. 12
Thank you so much, Lance, for all those wonderful ideas. And PGW doesn't need Council's permission to do any of that stuff. They just need to develop the programs and propose them to their board. We have budget oversight. That's about all we have. Bring the program to the Council. I think Council is saying they want to do whatever we have to do to make sure that the company is running efficiently, and any 141 03/30/04 - TRANSPORTATION - RES. 040149, 040216 creative idea that helps not only them, but helps the consumer, we don't have to give our permission to do that. It's inherent in the fact that we tell them to run the company in a way that's going to be beneficial to the ratepayer and also cause them to collect the money that's due them.
Perhaps I'm deferring a little bit too much to Councilman Cohen's request.
I think what you need to do is talk to the Administration and to the board to give them the leeway to do the things that they need to do. That's where the real power comes from. I mean, Council is probably secondary in this business here, from my observation.
I thought it was an excellent suggestion -- all suggestions by Lance Haver. But with me, I have to tell you 142 03/30/04 - TRANSPORTATION - RES. 040149, 040216 the first one is leadership. Whatever good you spoke of, I think it had nothing to do Mr. Knudsen. Anything wrong, I agree everything had to do with Mr. Knudsen. That's how I feel about anybody who asks City Council to butt out on our most important assignment. A City facility is in trouble and he tells us he's the one that's responsible. Let him go solve it. If the Mayor feels that he wants him to solve it and not Council, let the Mayor and Mr. Knudsen solve it. I'm not for helping them because I think they're going to get us deeper in trouble and not going to help solve it. But what will help it is if Mr. Knudsen resigns or gets removed from office and we get somebody in there really interested in helping PGW survive, either as an entity or some other form with the City government.
Councilman, I want to as respectfully as I can disagree with you. Mr. Knudsen has made tremendous strides in improving the company. It has a long way to go. And I would encourage you to sit down with him in private and talk with him. He has 143 03/30/04 - TRANSPORTATION - RES. 040149, 040216 been an advocate for the poor for many years. He has done good things --
Well, Councilman, as much as I respect you and as much as I think you're wonderful and you've been a great voice, on this one point I have to disagree and say I think you're wrong. But I do thank you very much for your gracious time.
I've called him on various times. He never replies to his phone because he doesn't think he owes any duty to speak to anybody in City Council apparently. So I've given up trying to communicate with him. There's no point. He just feels he doesn't have to respond to you. He can ignore you. Maybe the Mayor can do it and get by with it. But I don't think Mr. Knudsen can do that and effectively operate PGW. Thank you. I'm sorry we disagree.
I have one question. Thank you, Mr. Chairman. 144 03/30/04 - TRANSPORTATION - RES. 040149, 040216 I read with interest a series of recommendations you spoke to on the kinds of things PGW can look at to reckon with this deficit we're facing. I was struck by the recommendation suggesting that, as we the City move to approve new tax incentive packaging, that we might want to strongly encourage those corporations to use PGW as a source of energy. Do you know if there are any other cities doing that type of thing? Do you have any experience you can look to which suggests this might be a good idea? Give us your insight on that.
PGW is the largest municipally-owned gas works in the nation. So it is unique in it being part of the fabric of economic development for the City. I'd be happy to look at the much smaller municipally-owned utilities like Memphis and Indianapolis and get that information to you. But in many ways, from my opinion, because we're in a crisis it gives us an opportunity to come up with some innovative solutions. We know that what we're doing now 145 03/30/04 - TRANSPORTATION - RES. 040149, 040216 doesn't work. Any person that you say we're going to raise the bills because other people aren't paying wants to scream. And the only way that becomes acceptable is if all the other options are worse. So what we have to do is come up with some innovative solutions, try them in small pilots, and those that succeed, implement, and those that fail, not be ashamed to say we tried something that doesn't work. I will do the research that you ask because of course I would like to see us try this. But I just want to make sure that we understand that PGW is really unique in its dire situation and unique in how large a municipally-owned utility it is.
Well, I agree with you completely that we have to think out of the box because following what's worked in the past isn't working any longer. I will look forward to that back-up information just to get a sense on what other cities are doing. I thank you for your insight on that. Thank you very much. 146 03/30/04 - TRANSPORTATION - RES. 040149, 040216
If not, the two resolutions before the Transportation and Public Utilities Committee, that is Resolution 9 040149 and 040216, will be held in recess until the call of the Chair. Councilman Nutter wanted us to express his regret at not being able to be here. That's because he was a recipient of the Fine Fellowship in Africa for a 10-day period. We all wish him well and are looking forward to his return in a couple of days. Thank you. Councilwoman Blackwell.
Thank you, Councilman. The Committee on Finance will reconvene in order to say that we will recess until April 7th, 2004 at 2:00 p.m. Let me note that we request that PGW works on the senior citizen info, so hopefully 147 03/30/04 - TRANSPORTATION - RES. 040149, 040216 during that day we can begin and end. It's a budget day in the morning, but we want to try to get this matter expedited. Thank you all and thank you for your patience. (Council adjourned at 5:05 p.m.) - - - - 148 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, March 30, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON FINANCE and COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES _________________________ Lisa C. Bradley, RPR