COUNCIL OF THE CITY OF PHILADELPHIA CONTINUED PUBLIC HEARING COMMITTEE ON FINANCE - - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, April 7, 2004 2:10 p.m. - - - - RESOLUTION 040229 - BILL 040153 - An Ordinance approving the Fiscal Year 2004 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works... PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD MARIANO COUNCILMAN MICHAEL NUTTER COUNCILMAN BRIAN O'NEILL COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNODS BROWN COUNCILMAN FRANK RIZZO COUNCIL PRESIDENT ANNA C. VERNA - - - - 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 I N D E X BILL 040156 THOMAS KNUDSEN, PGW.................. CRAIG WHITE, PGW..................... 6 STEVE HERSEY, PGW.................... 60 7 8 9 10 11 3 04/07/04 - FINANCE- RES. 040229
Good afternoon. We would like to thank you for your patience and announce that the Committee on Finance is now in order. Today, it's a continuation of the originally scheduled hearing on March 24th, 2004. The hearing was recessed in order for PGW to come back today to address concerns outlined in Resolution No. 040229, sponsored by Councilman Brian O'Neill, which deals with the Senior Citizen Discount. I have two other questions on another matter, but I'm happy to first defer to my colleague, Councilman Brian O'Neill.
Thank you, Madam Chairwoman. I believe that the negotiations with my office and PGW have reached a positive resolution. It involves the audit of Senior Citizen Discounts, which is very proper. We had a few years where it wasn't done. I'm sure that won't happen again. And a removal over the past several years of some not-so-cost-effective locations in my district 4 04/07/04 - FINANCE- RES. 040229 that require people going a much longer distance to try to work out the discount being kept after a senior member of the household has died. So using the mini City Hall right off of Welsh and the Boulevard, it's central to the Northeast. It would be used just during this period, one day a week for six to eight weeks, and I think it will provide enough service to people. If someone can't get there, we'll know it's a true hardship and we'll deal with that. For the most part we're dealing with seniors who are spouses of deceased Senior Discount eligible people, and I think we'll get a lot of people off the Senior Discount who aren't seniors that have been riding on a deceased family member's discount, which is good for all ratepayers. I want to thank PGW, although it took a little bit longer than I would have liked, it's all going to work out in time, I think, for everybody to get what they need. I would like to thank Mr. Knudsen and Mr. Hershey, particularly, for working 5 04/07/04 - FINANCE- BILL 040153 this out.
Thank you very much. Are there any questions from Members of Council with regard to the Senior Citizen Discount? (No response.)
We will go back to our discussion on the Capital Budget, which is Bill No. 040153. In that regard, I have two questions. One is with regard to the soft-off, because I was told today that there were some issues with that, and I would like you to explain what the soft-off is and go from there.
Madam Chairwoman, soft-off is a process that we follow. Essentially, what it means is that we don't formally, physically turn someone off before another. And it's usually a rental circumstance where one tenant leaves, the next tenant comes in. We don't formally turn them 6 04/07/04 - FINANCE- BILL 040153 off. It's called a soft-off. We simply recognize that the ownership of the account, the accountability for the account has shifted from one name to another. That's essentially what it involves. Since I'm not the technical person on this question, I would be pleased to write a formal explanation for you for the record on this issue. But it's a process that was followed for many years. We discontinued it for a period of time, but it's more cost efficient for us when we know when one party is leaving and another party coming not to go through all of the requirements of a formal shutoff.
So this means during that interim period then, neither customer is billed, am I correct?
Well, if that's the case, PGW bills itself. It's less expensive for us to bill ourselves than to actually deploy people into the field to try and make this. It involves a circumstance where we know there's a change taking place. 7 04/07/04 - FINANCE- BILL 040153
So then if we have consumers or customers who have some issues about that period, then I assume that we can be in touch with PGW. We usually get it when a person says, "I moved out and I contacted PGW, and I moved out on April 10th, and here it is January 15th and I'm being billed."
In that instance then we rely on our phone records, which are quite precise now, and we hold those records for a long period of time. We go back and reference those and establish the exact moment of the time that the service was discontinued. I feel inadequate to answer your question, frankly, but I will provide for you and for the record a detailed explanation of soft-off.
Thank you. Also, with regard to Mr. Harvey Clark on the news, whenever I turn it on, and all of the talk and on the radio every morning, where are we with regard to rates? I know you said at our last hearing, 8 04/07/04 - FINANCE- BILL 040153 about two-thirds of the people who could be contacted were, and are trying to apply for LIHEAP grants. As you know, we had legislation to try to apply to get more dollars from the State. Where are we on that whole issue of that and the additional surcharge for the customers?
Well, in terms of LIHEAP, there's two initiatives in place right now -- well, there's three. One is at the federal level, making sure that the amount of potential appropriation under the current bills in Congress are moving from a level of about $1.8 billion, $1.9 billion per year for the entire country to $3.4 billion. That will ensure that we get an additional amount of money in Pennsylvania. The second initiative is to make sure that Pennsylvania holds its proportionate share of the money that's going to be coming from the federal government. And the third initiative is that we in Philadelphia, specifically in PGW, most specifically, get our fair share. 9 04/07/04 - FINANCE- BILL 040153 So each of those is an initiative that we've undertaken. I've testified at the federal level. I've taken the case to the state authorities. In fact, we met with Secretary Richman the day before yesterday and got her support for this kind of effort. And I've also argued directly to Secretary Richman of the need for PGW to have a fair allocation of the resources for our needs. So each of those is in process right now.
So at this point, our ratepayers still don't have to look forward to an increase, correct? We're still investigating that and assessing our income?
LIHEAP is one of our sources of income. Let me repeat my testimony. The proposed regulatory process that I have in mind, which is the Reconciliation Clause, is strictly right now an insurance policy. We are doing everything we can to collect from the customer. Only if we fall short of our goal would we employ this proposed reconciliation mechanism.
So we're 10 04/07/04 - FINANCE- BILL 040153 still in the holding mode?
We're still in a holding pattern, that's right. As I indicated to you at the last hearing, I would come back to you in the June time frame to let you know where we are and what I thought we would or would not have to do.
Thank you. Before I ask my next question, let me ask those Councilpersons who are on the Finance Committee who are in the building if they could come to the Council Chambers because we are concluding our testimony. My final question, Mr. Knudsen, is that it is my understanding that PGW has different rates for and various classifications of users. Can you explain what residential accounts are, commercial accounts and PHA accounts, how they differ?
I'm going go ask Mr. White to explain this a little bit. Let me just brief him because I haven't spoken with him. 11 04/07/04 - FINANCE- BILL 040153 Madam Chairwoman, my expert is here.
Thank you. Would you identify yourself, Mr. White?
Thank you. My name is Craig White. I'm the Acting Chief Operating Officer. I appreciate the accolades of being an expert, but I'll do my best. With respect to the PHA rate, there are actually three different rates that PHA facilities get billed under. There are PHA scattered sites, which get billed under our GS rate, our general service rate, just like any other residential customer. It's the same rate that applies to an individual homeowner. And that's applied to the scattered sites. They also have a certain amount of dual fuel where they can burn both gas and an alternative fuel other than gas, in most cases oil. In that case most of those facilities are on what we call our BPS rate, our boiler plan service rate. That's an interruptible rate. Then there is a third rate, which is 12 04/07/04 - FINANCE- BILL 040153 the PHA rate. The PHA rate is a rate that is priced within -- if it's not identical, it's within hundredths of a cent from the commercial rate that we charge commercial customers. Commercial customers pay what we call a commercial general service rate, and in both instances they pay a monthly customer charge and then they pay the volumetric rate, which is per MCF.
Yes. And I guess the point that I'd like to stress today, those facilities are typically your multi-unit apartment buildings that fall under the PHA category, which would not be any different than the commercial multi-unit buildings. They get billed under our general service rate.
My question is -- if the scattered site rate is the same as individual homeowners, that sounds fine. But I take issue with PHA -- we all know that PHA homeowners are low income people -- or 13 04/07/04 - FINANCE- BILL 040153 home renters, I should say -- home renters or homeowners are low income folks, and why would they be charged a commercial rate? Can't we charge them a regular residential rate?
They're not being charged a commercial rate. They're being charged the PHA rate, which is basically identical to the commercial rate. If I'm an apartment building owner and I have, say, 10 units in that building, I'm paying a commercial general service rate. If I'm a PHA building with 10 units, I'm paying a PHA rate. The two rates are all but identical.
I disagree with that. PHA folks are low income folks. Why wouldn't everybody be charged a residential rate, the same rate? To live in PHA, to move in PHA, you have to be low income to begin with. So why would they be charged the same rate as a commercial account?
The best I can do on that answer is that since these facilities are basically of the same structure or the same make-up as the commercial accounts, they were 14 04/07/04 - FINANCE- BILL 040153 categorized in our last rate case under the PHA rate, and the PHA rate was viewed appropriately representative of the cost associated with those types of buildings. I think the key here is that I think in some cases it's been represented that PHA is actually paying more money. PHA is paying for scattered sites. Individual homes are paying the same thing that other general service customers are paying. In a multi-unit building, they're paying a rate which is basically the same as a multi-unit rate building rate for commercially-owned property. One last item, Councilwoman, if I may. In our last rate case we had numerous interveners in the case. PHA was not one of those interveners. We didn't approach it in any way to take advantage of PHA. As a matter of fact, we kept it pretty much transparent from where it was prior to falling under the PUC. So it wasn't as if we took an opportunity to change the rate when we fell under the PUC. It was what it was for many, many years. 15 04/07/04 - FINANCE- BILL 040153
As I indicated to the Chairwoman, we would pleased to assist PHA in making the appropriate applications to correct what they perceive as being a problem here. That's all we can do because the rates right now are established by tariff before the PUC. We'd have to open up a whole proceeding to make the changes. As I indicated to you earlier in conversation, we're not talking about a lot of money here. I think we calculated it's something like $75,000 as a result of their paying a slightly different rate than they would under the way they want to be charged. We would be pleased to help them correct this at a future time.
So you're saying it's probably a form they need to fill out?
It's more than a form, Councilwoman. They actually have to intervene in the rate proceeding at the PUC to change their rate.
Point of 16 04/07/04 - FINANCE- BILL 040153 information.
I'm not clear. When we're speaking of PHA, Philadelphia Housing Authority, and the rate at which they're being charged, specifically on the multi-family dwellings, that's a commercial rate?
It's very close to the commercial rate. The buildings are treated --
The monthly customer charge is identical and the per MCF rate is --
Is the charge to the individual occupant or is it to the Authority? Is it the Authority that's being charged or is it the tenants?
I was concerned with the Chair's question. I think the Chair is under the impression -- and I was at first -- that the customer, the individual customer, is being charged the commercial rate when it's 17 04/07/04 - FINANCE- BILL 040153 the Authority; is that correct?
We appreciate that clarification. That is correct. The only parties that are living in PHA housing that get charged directly and are asked to pay us directly are the scattered sites that receive the general service rate, that's correct.
If I am a tenant in a multi-unit apartment building, a PHA apartment building as an example, I'm not being charged the commercial rate for gas use; The Authority is picking up the bill because they're basically heating the entire building?
So it's not the individual low income family that's paying.
But isn't the tenant in PHA -- the renter receives a rate, so they may not pay their utility separately --
So it's included in their monthly bill. 18 04/07/04 - FINANCE- BILL 040153
As I understand it, PHA receives the federal dollars to pay the gas bill on behalf of customers that are on PGW's PHA rate. PHA also receives the federal dollars to pay for the customers that are on the general service rate. But the difference is that PHA distributes the funds to the individual consumer, and the consumer then has the responsibility to pay the Gas Works. With respect to the people who are living in a PHA -- in my example, a multi-unit facility, they are not seeing the check nor are they paying the check. They're not seeing the bill and they're not paying the bill. That is a PHA function. Whereas, if you're in scattered sites you actually receive the contribution from PHA and you have a responsibility to pay the bill directly to PGW.
I'm not sure that's correct. I'll call and get verification. But if a tenant pays a bill 24 that includes their utilities, the tenant is paying the bill. That bill is factored into 19 04/07/04 - FINANCE- BILL 040153 what their rent is. So it's still the tenant paying.
Well, it's the cost of charging rent for living in the unit. There is some --
I mean, if that's $75,000 that a low income tenant shouldn't pay, then certainly we would rather give it to the tenant associations or use it for job training or other uses in the facility, than paying a different rate.
We can get back to you specifically on this, but it's our impression that the federal government pays this bill, and I don't believe it goes to the tenant as part of any kind of requirement. But we'll clarify that for the record and get back to you on that.
Councilman DiCicco. 20 04/07/04 - FINANCE- BILL 040153 Let me note that Councilman DiCicco is here, Councilman O'Neill to my left, and Councilman Ramos to his left. Councilman DiCicco.
When we talk about delinquent customers to PGW, how does PHA rank? Do they pay their bills on time? Are they delinquent? Does PHA have any of its facilities, either multi-unit -- let's talk about multi-unit. Are their bills delinquent? Are they behind in any of their payments that we know of?
Councilman, on the matter of the payments from PHA to us, we have over time worked out a very efficient method for recovery of cost from PHA directly.
So they're not in that pool of, for lack of a better word, which we are referring to as the deadbeats? They're paying their bills pretty much on time, regularly?
Yes. PHA is, in fact, paying its bill regularly. 21 04/07/04 - FINANCE- BILL 040153
Can anyone quantify what that number may be on the number of PHA scattered sites and the people who live in those units about who is paying and who is not paying?
We have some statistics and we can provide those for you for the record.
That would be very helpful. I do have some other questions relating to the medical questions that I asked the other day, and your written testimony, which I didn't get until an hour or so ago. I really haven't had that much time to go through it. So if anybody else has any questions on the heating stuff and delinquent payments, I'll hold off on these until that time.
Let me note 22 04/07/04 - FINANCE- BILL 040153 that the President is here, President Verna. And I'm trying to call and get clarification, so I'll defer to my colleagues for their questions.
I have a quick question on the collection aspect. As Chairlady referred to, it's hard not to hear Mr. Clark's voice, particularly on radio. But my question is we have some process to go through now that we started the campaign. A lot of people have asked me why we didn't start it earlier so that we'd be at the end of the process part when we were permitted to do the shutoffs rather than waiting until the beginning of the shutoff period before we start the process. That has some elements to it that take some time.
Councilman, we did. It's a question of degree, not of time. What we did do is we started the process mid-March. Understand, we can't turn people off physically until the end of month.
That's the end of March? 23 04/07/04 - FINANCE- BILL 040153
End of March, April 1. Now, the other part of that is that we try to get sort of the bulk of them out, but we cannot physically process all of them at once. So what we do then is we try to spill that a little bit out over the first several weeks of April. But by the second or third week of this month, we will have everybody in the works. In other words, they are then subject to five separate steps of notification, and then a shutoff if they haven't come in those five steps of notification to make an agreement or to make a payment.
It's my very point. If there's five or six steps of notification, why would you be completing them around April 1st rather than beginning them?
It's a PUC set requirement. So we were prepared to shut people off the 1st of April when we notified them 10 days ahead. We started that process. A lot of them were eligible for turn off immediately. But we cannot process them all 24 04/07/04 - FINANCE- BILL 040153 at once. We spread that out over a couple weeks. That's the only issue. Ideally, everything would drop in place on April 1st. Can the phones handle it? No. Can we process the payments effectively in that reduced period of time? The answer is, it's very hard.
As I said, we are fully in place in the first two weeks in April.
Oh, absolutely. We have no interest in delaying this process at all. We are right on top of it.
I hope the Chair won't mind if I actually ask a Capital Budget question. It's so hard to stay off the operating side with collections and everything. But the bill before us is the Capital Budget. I want to give you one more 25 04/07/04 - FINANCE- BILL 040153 on the collections. I'm told that there are about $10 million worth of payroll involved in collections of PGW, the staff that are doing collections. Does that sound right?
It wouldn't be collections. It would be our entire customer service area.
We have what's called our customer service department, and that includes the phone center, our back office, paper processing, mail receipts. And then on the collection side we have a full phone collection effort and a full back office, as it were, collection effort as well. That together may total --
Give me a ballpark on how you spend internally as opposed to your outsourcing of your collections.
On collections alone? It's hard to say because we shift the burdens 04/07/04 - FINANCE- BILL 040153 between our customer service areas.
I'm told you spend $10 million and get $2 million back.
It's kind of a far cry from one to the other. If you can give me some idea of what that effort costs and what it produces, because somewhere you have to be able to figure out internally where you're picking from other areas that do other things. How much of their time is allocated to collections?
This isn't a simple process, because by maintaining our collection function, we put pressure on all of our customers to pay their bills. So whether they are directly touched by our collection effort or whether they just know that we're there and ready to dun them or to turn them off when the time comes, they pay their bills. So there's a direct and an indirect involvement with our collection department. It's not $10 million. I'd have to get you the number, but it's substantially less than $10 million simply for 27 04/07/04 - FINANCE- BILL 040153 the collection effort itself.
We have four outside collection companies that we use right now?
We have four firms that we have contracted with to essentially -- once we've written paper off or we have final billed paper, final billed our bills, we give it to them to collect. Yes.
That piece we don't do because we found it more effective for us for outside firms to do that.
If you don't have it at your fingertips, I'll understand. The names of the companies you have, can you give us that now and then maybe the next time you'll turn it in to us at some point? Meaning, what I really want to know is how much we pay them and how much they collect.
Who are the 28 04/07/04 - FINANCE- BILL 040153 four companies?
Is there somebody here who can tell us the four companies?
No. My vice president for customer service didn't show today, so I don't know. I'd have to get it for you. And we have a straight analysis showing how much paper we've placed with them and how much they're collecting.
We have two very effective ones and two very ineffective ones?
On the Capital Budget, what is in essence last year's Capital Budget, the one that should have been approved before July 1st?
That's what's 29 04/07/04 - FINANCE- BILL 040153 in front of us now. How much have you already spent of what you're asking us to approve?
Well, the bulk of our investment is still in front of us for the year.
I understand. I'm trying to remember. Subject to check -- and I'll confirm this to you -- I think we would have spent by March, out of the 65 or so 13 that's in this budget. 14
I have a 15 question I'm going to ask. The President is 16 here. The Finance Chair is somewhere in the 17 room. It would seem to me that if this were 18 the City Administration sitting in front of us 19 telling us that even though we haven't 20 approved the Capital Budget yet, they had 21 spent one third of it, we'd be turning the 22 tables over up here. I don't see any 23 difference when it's PGW doing the same thing. 24 We have to approve the Capital Budget. We 25 haven't approved it, and a third of it has 30 04/07/04 - FINANCE- BILL 040153 already been spent. There's such a great disconnect here that I have trouble even believing it. Can you explain how this happens?
Well, I think it had its origins about years ago when the 8 budgets were handled separately and the 9 Capital Budget was brought in the spring time 10 for resolution before Council adjourned. I'm not exactly clear what happened, but a judgment was made that it was better for PGW to have the Operating and the Capital Budget dealt with at the same time because so much of what we do is interlaced. A process with the Gas Commission evolved where we had and were granted, we thought legitimately and I think they thought legitimately, some kind of continuing spending authority in the absence of formal authority from the Council on our Capital Budget. That process continued for a period of time, for 10 years at least. And we have been informed that that is not acceptable. And we are now preparing our Capital Budget for submission to 31 04/07/04 - FINANCE- BILL 040153 the Gas Commission and to you for resolution 3 prior to your adjournment this year.
I mean, if $25 million has already been spent, you can't get it back. But you will agree from this point on not to spend any Capital money that hasn't been approved by the Council?
I'm not just talking about the upcoming '05 Fiscal Year, I'm talking about the remainder of '04.
In concept, absolutely. There's some mechanical issues here with things that have already been committed to. But we desperately need the approval of this City Council on this matter immediately. We have pipe that absolutely must go in the ground for safety and reliability purposes.
We're going to leave this hearing and go right into the Capital Budget for the City's '05. We haven't approved your '05 yet. Can you emphatically 32 04/07/04 - FINANCE- BILL 040153 state that until your '05 budget is approved, no money from that '05 budget will be spent?
Can you send that to the President and the Chair of the Committee in writing? I'd appreciate that before I have to vote on this bill in final passage. I think we'll probably vote it out today. Some traditions have to change. I don't think there's any question about it.
Councilman, we are absolutely on board with doing it appropriately and doing it according to law. We understood that we were okay with the continuing spending authority. Since we're not, obviously, we have to change the process.
Mr. Knudsen, how many people do you have in your PR department, and what is the budget for that department? 33 04/07/04 - FINANCE- BILL 040153
It's been about the same. Since we restructured the company and downsized most of the departments --
Something like $150,000. Just recognize that we do all of our own artwork. We do all of our own placement.
Councilman, I've misspoken. I think we're going to have to get you the appropriate number.
Mr. Knudsen, you 34 04/07/04 - FINANCE- BILL 040153 just said something that got my attention. We've been talking about the company restructuring and doing things differently. Do you think it's appropriate that you're doing your own art work? Do you really believe that there isn't a better way to out-source some of that stuff?
Councilman, we have a very effective art person and we save a great deal of money, a great deal of money, doing it inside. Mr. Clark would be happy to answer your questions, I'm sure.
You are going to get the information to the President and the Chair on the collection firms, costs and recovery?
Yes. I'm sorry, Madam President, to pull you away from the conversation. We'll get you the budget and the numbers of the full-time 35 04/07/04 - FINANCE- BILL 040153 equivalents and what we spend our money on. This is also an area that we've looked at.
Do the three people represent a company or are they just employed individually or independently?
We have three people on payroll at PGW doing our public relations communications efforts. This is all of our internal organs, with the magazine that we have inside, it's the bill stuffers, it's the Get Good Gas News. All of that is done inside. We do have an advertising budget in order to place our notices for changes of rates and so forth. We can give you an entire breakdown, and I think you will find that it's quite cost-effective.
Thank you. Mr. Knudsen, I believe that last you testified you stated that PGW is $1 billion in debt. And I believe that was the same figure, or we're being told that it was the same figure used in October of 2000. The question is, could it be possible that there is not any dollars in debt that has been accrued since 36 04/07/04 - FINANCE- BILL 040153 2000?
I think my testimony was that it was $1.1 or $1.15 billion before. And, yes, there's been some growth in the debt since that time. But understand, we pay debt off regularly and we incur new debt. We did have earnings as well over that period of time. So, again, I can provide that information to you. But just for purposes of this discussion, our debt over the last several years has been around $1 to $1.1 billion.
Thank you, Madam President. Earlier when I asked about some statistics on the number of PHA scattered site customers, if you would include -- and you may intend to do that, but I'd like to make certain that you include the number of PHA customers, residential customers, and what percentage of those customers fall within the non-paying population, if you will.
Yes. I understood your question. 37 04/07/04 - FINANCE- BILL 040153
Another question I had, are you aware of the letter that was sent to Councilwoman Tasco from District Attorney Lynne Abraham?
I received it yesterday, I believe. In it, the District Attorney raises a question about the shutoffs, and I will read the line where she says what Mr. Knudsen failed to say, again concerning shutoffs and the shutoff involving the PUC, is he failed to say -- and no one has, to my knowledge, put on the table -- is the fallacy of the statement about the PUC's position on shutoffs. Mr. Knudsen made his statement as if the PUC has the final word on this and other issues, when that is far from the case. From this question or comment, I'd like to hear from you who has the final say in shutoffs.
The PUC regulations are very specific, and we get fined when we are in variation with Chapter 56, which is the guiding legislation. The rules are very 38 04/07/04 - FINANCE- BILL 040153 specific about who may be shut off, under what conditions, after what amount of noticing. So we follow those to the letter in order that we don't take a financial penalty. That being said, obviously we shut people off. So we have notice for 130,000 potential shutoffs. We're in the what we call our credit and collection path, that's the five to six steps that people have to go through prior to being shut off. And when that is over and if they haven't paid, we shut them off. That is in accordance with the PUC requirements or guidelines.
Has PGW ever been in a position where shutoffs occurred and the PUC has ruled against those shutoffs, to the best of your knowledge?
Let me answer the question. The circumstance normally arises when we have shut someone off, they have appealed, what's called an either informal or formal appeal, to the PUC and the PUC has effectively required that we put somebody on that we might think they ought not. 39 04/07/04 - FINANCE- BILL 040153
So the PUC basically reversed the decision of PGW to turn off the service?
We would disagree over turning somebody on, but we follow the PUC requirements on that.
Has PGW ever filed an appeal to the Commonwealth Court or any other court in the Commonwealth to overturn what the PUC's decision to overturn your decision was in the first place?
Let me just check, Councilman. Again, if I'm not correct, I'll submit something to the record. We have appealed some of these decisions to the PUC itself. We have not gone beyond the PUC to the courts. Other people in the state have, and we rely on the precedence of other utilities. I'll give you a case in point. Recently, PECO got a ruling from the PUC that there should be only one agreement per customer per violation. We're relying on the PECO determination here as precedent for us. 40 04/07/04 - FINANCE- BILL 040153 So I'm sure at some point one of our decisions before the PUC will be precedent for others.
I appreciate the report on the questions I have concerning the medical unit. As I said earlier, I really didn't get a chance to go through this at all in any thoroughness. I do have a question, though. On , workforce qualifications, where the medical unit performs disability evaluations. Is the employee mandated to come through that process or can they opt to go to a private physician or their family physician?
I think that would be helpful for us. I understand, from what I was able to glean from your report here, some of the savings by being able to do it in-house. I'm not suggesting at all that it doesn't make sense, but I'm just curious. If I'm an employee and I'm not mandated to go through that process, I choose an outside, so what do I need that doctor for? 41 04/07/04 - FINANCE- BILL 040153
Well, understand, we like to have things confirmed as well, so...
Again, on of your testimony, you outline present structure and alternative structure. Do I take alternative structure to mean out-house and not in-house? I'm not sure of that. What does that mean?
On your testimony, you give us a financial breakout of the cost of the nurses, the doctors, et cetera. Present structure versus alternative structure. What is alternative?
I thought so. I just wanted to be clear on that as well. There's really no difference in your estimation, there's no real savings, it's basically dead even?
Well, in that regard, it is. But I think also at the end of page -- 42 04/07/04 - FINANCE- BILL 040153 I think it's on -- where we indicate a dozen or so additional issues that haven't been quantified.
Again, I quickly tried to read this as I was walking up from my office to this meeting.
And I think it is thorough and I'll have some more time to go through it in the next couple of days. On a totally different issue -- and I think this comes up just about every year -- the number of vehicles in the PGW fleet, my real concern is for those vehicles that are non-essential vehicles to the operation of PGW. I'm not talking about maintenance trucks, emergency vehicles, what-have-you. I'd like to have some information on those vehicles and the number of people who are permitted to take those vehicles at home and 43 04/07/04 - FINANCE- BILL 040153 the rationale for that. And does the fuel, the gas that operates these vehicles, does that come from a fuel depot that you have or do they go to a City installation?
Basically, the one at the headquarters at Ninth and Montgomery.
Is it the system that we now have with the City with the computerized system that has the chip in it and all that stuff that better monitors that?
That's correct. We just had a major review of this at the Gas Commission and we have also committed at the Gas Commission to a whole fleet evaluation. We're looking at this entire area constantly and we'll be making some additional changes soon.
You may have read in the paper about the Philly Car Share 44 04/07/04 - FINANCE- BILL 040153 Program that the City is now involved with. I've been involved with that group for a couple years now. I've actually helped get them some grant money. I think it's something, if you haven't already decided, you might want to look into. Some people wonder if they're paying for someone to be able to take a vehicle that belongs to PGW. It's like for personal use. That's not job related.
This is our concern as well. We do have requirements that people on call be able to get to an Ogontz situation as quickly as possible. It's not only people on duty at that time, but others come when there's an accident of that nature, and that's really what some of this is designed to provide for. But there's no question, this always has to be evaluated and we're doing that.
And I understand that you need certain personnel at emergency times to be at a location, and I can appreciate that. I guess my concern is -- because I think I may have raised these same 45 04/07/04 - FINANCE- BILL 040153 concerns over the last few years -- is that that same person could get from their home to that site in their personal vehicle and it may be less expensive to reimburse them for the fuel. I worked for PennDOT many, many years ago as a construction inspector, and I was given mileage, cents a mile, I think it 10 was, and then a dollar for every hour I was on 11 the road, which could be less expensive than 12 having that vehicle, insuring the vehicle, 13 purchasing the vehicle, maintaining the 14 vehicle. And again, I'm not talking about 15 vehicles that are necessary to deal with the 16 emergency at hand, the truck with the equipment in it that is necessary to shut the gas off and do whatever else that has to be done; I'm just talking about an employee who is a supervisor, as an example, goes from point A, which is his or her home, to point B for the purpose of that emergency or whatever other normal business, for that matter. Putting emergencies aside, that has to be very, very expensive. 46 04/07/04 - FINANCE- BILL 040153
It is and we're looking into that. I think your observations are well taken.
Mr. Knudsen, I think you know that I'm not one to go for anyone's jugular vein, but we have been talking about this for about as long as I've been in City Council and we keep hearing, we're working on this.
We have been shrinking the fleet consistently. Your criticism is heard.
The Chair notes that Councilman Mariano is here as well. To get back to this whole issue -- we did have a bit of a sidebar. And the issue for PHA becomes -- they said in the last several years, in five years it cost them $2 million, and that the issue is that PHA be charged the municipal or residential rate and 47 04/07/04 - FINANCE- BILL 040153 not the commercial rate. These are low income people. And we are requesting that you find some way to help drive their request with the PUC and to put it forward and to consider that this client base are low income people. I don't even know how we ended charging PHA customers more. It just really doesn't make sense to me.
This is just on the multi-family dwelling. We're not talking about the scattered sites.
We're talking about PHA accounts. PHA pays a different rate than other customers. They pay a PHA rate and their rate is a commercial rate. They're PHA, so they should pay a residential or a municipal rate and not a commercial rate.
Again, Madam Chair, if I may. Point of information. There are two -- and maybe more than two, but at least two that I'm thinking of, customers that we're talking about. We have the PHA who resides in the scattered site, 48 04/07/04 - FINANCE- BILL 040153 single family home, that pays residential rate; is that correct?
So I think what the Chair is speaking to is the PHA customer who is in a highrise, multi-family unit where PHA is paying commercial rate. They're two different, distinct issues.
That is correct. I will get back to the Chair on this question and we'll clarify with PHA so that we're absolutely on the same page. I don't want any confusion on this.
In fact, the highrises, PHA has tried to do away with highrises. So the highrises are generally the older buildings. They don't want to pay more for highrises than people don't want to live in them, if they have to move into a new brand-new unit like the Lucien E. Blackwell Homes or some other place like that. However, it just doesn't make sense to me to have a PHA tenant pay a commercial rate. It just doesn't make sense. And I'm 49 04/07/04 - FINANCE- BILL 040153 not saying that it started with you. Obviously, it didn't. It started before that. But we're here now and we want to try to rectify it and we need your help to do so. This whole issue of somebody paying more, it doesn't make sense because the customers don't have anything. So their rent is based on what their utilities cost too. So ultimately it still comes back to the tenant, one of those 80,000 people who live in PHA. We would like your assurances that if it has to go to the PUC, that you will put forward the argument -- the question, maybe, is a better word -- of PHA paying municipal or residential rates for these customers.
We want you all to lead it. I don't want PHA to assist it because I don't know if they know. I mean, you all are the gas company. So we need you to put forward the argument and they'll do whatever it is they need to to support it, to legally support it. 50 04/07/04 - FINANCE- BILL 040153
Thank you. Questions from my colleagues? President Verna.
Thank you. Mr. Knudsen, I'm referring again to the District Attorney's letter.
She indicates, "Mr. Knudsen never denied that this 'new surcharge' proposal is not new at all, and that in fact ratepayers are already being surcharged for those who don't pay." I would like your comments on that, please.
This surcharge is new. Up until now we have only had base rate proceedings, firm cost proceedings. Within our base rates are now locked in several provisions: Bad debt, which is part of the conversation that we're having right now, this has now changed; Conservation; And as Mr. 51 04/07/04 - FINANCE- BILL 040153 White clarified for me, the structure of the Senior Citizen Discount flows through a new kind of surcharge that came with restructuring. But it is essentially a base rate proceeding. The difference between this proposal and what is in base rates right now or what is billed to customers is that this will not take effect if we're able to collect the money. We have no other provision like that in our tariffs. This is a brand-new idea. It's a new idea to Pennsylvania. It's not a new idea to some of the other states who have been struggling with these same issues and have come up with a flexible answer. So to answer Ms. Abraham's statement, it is a new proposal of a new mechanism that is flexible and is not fixed. That's what's different about it.
Isn't there about 20 or percent of what gas customers 25 pay today, before any talk about a surcharge, 52 04/07/04 - FINANCE- BILL 040153 I'm talking about the approved rate, that pays for other people's gas?
It's not that high. It's about percent, percent. That's the 6 bad debt plus what's called the universal 7 service charges, which are CRP, Senior Citizen 8 Discount, conservation. 9
How much of it 10 is paying for people that don't pay, not 11 conservation, not Senior Discount, 12 percentage-wise? 13
And what 18 percentage is the surcharge asking for? 19
If we were to get the entire surcharge, about 5 percent, 4 percent.