COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 9, 1998 2:55 p.m. - - - BILL 990361 - Being held. BILL 990419 - Approving the Fiscal Year 1999 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds to be obtained in connection therewith and rejecting the forecast for the Fiscal Years 2000 through 2004 PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCIL PRESIDENT ANNA C. VERNA COUNCILMAN DAVID COHEN COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/9/99 FINANCE COMMITTEE, BILL 990419 I N D E X Gregory Martin . . . . . . . . . . . . . . . . 4 Executive Vice President and Chief Operating Officer Philadelphia Gas Works Mr. Stensin. . . . . . . . . . . . . . . . . . 7 Philadelphia Gas Works (First name and title not identified for the record.) 3 6/9/99 FINANCE COMMITTEE, BILL 990419 P R O C E E D I N G S
Good afternoon. Thank you for your patience. It's been a day of hearings, and there's one after this one as well. We are now calling the Finance Committee public hearing into session. We have a quorum. Councilman Nutter to my right, Vice Chair Councilwoman Tasco to his right, and to my left, Councilman David Cohen. The clerk will read the title of the bill. Before that, let me announce that Bill 14 No. 990361 will be held. The clerk will please read the title of Bill No. 990419.
Bill No. 990419, an ordinance approving the Fiscal Year 1999 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds to be obtained in connection therewith and rejecting the forecast for the Fiscal Years 2000 through 2004.
Thank you very much. 4 6/9/99 FINANCE COMMITTEE, BILL 990419 Thank you again for your patience. Please identify yourself for the record and then begin your testimony, Mr. Martin.
Good afternoon, Chairwoman Blackwell, Vice Chairwoman Tasco, and other members of the committee. My name is Gregory Martin. I'm Executive Vice President and Chief Operating Officer of PGW. I'm appearing on behalf of PGW, asking the Committee to consider and to report favorably on Bill No. 990149. PGW's also asking the committee to recommend that the City Council approve and authorize the Fiscal Year 1999 Capital Budget Program in an amount totalling $45,598,208. In addition, we're asking for a suspension of the rules to permit earlier report and consideration of the bill. The proposed capital budget would supply enough resources to manage and operate the Gas Works in a manner maintaining properties in good order and condition consistent with the best in economical processes that are usually customary for a regulated gas distribution utility. In addition -- excuse me, in general, the budget 5 6/9/99 FINANCE COMMITTEE, BILL 990419 reflects resources needed to distribute and deliver natural gas to the citizens of Philadelphia. Included are: $1.8 million for the initial phase of replacing the liquified natural gas plant, $21.6 million for installing mains and services for new and existing customers. $8 million for the Automatic Meter-Reading Program and new meters. $8.84 million to complete the implementation of the technology infrastructure. $1.1 million for the Y2K contingency. $2.76 million to replace an aging telephone system. And nearly a million dollars to replace the supervisory control and data acquisition system that manages and controls the gas distribution system. This Capital Program enables PGW to continue to provide safe and reliable gas service to its customers. We encourage the committee to vote favorably on the bill. And we're here to answer any questions that you may have.
Thank you. I 6 6/9/99 FINANCE COMMITTEE, BILL 990419 think we only have two questions. I have one and Councilwoman Tasco has one. Would you explain why the Gas Commission rejected the proposed forecast for Year 2002 and 2004. Do you have any idea on that?
I do have an idea, Chairwoman Blackwell. I believe that there were some inconsistencies with the forecast that we were proposing -- proposing in our filing and some inconsistencies with the answers that we provided the Gas Commission during the course of the proceedings and needing further explanation. And we did not convince the Gas Commission sufficiently to recommend approval of the forecast.
Where are we on the AMR installations? I notice you have money in here for the AMR installations. Where are we in 7 6/9/99 FINANCE COMMITTEE, BILL 990419 terms of completion of that project?
Okay. If I may, I'd ask Mr. Stensin to come up to help with this response. In general, I believe that we are -- we have about 400,000 AMRs installed, and it looks like another year and a half before we complete the 520,000 or so AMRs on the entire system. (Mr. Stensin comes forward.)
We've been working very hard at this, and Gregory probably hasn't read the latest report, but we're up to 460,000 installed, and we probably ought to finish it next year sometime.
Is that in keeping with the time schedule you gave to us at the Commission?
I believe that when the program began in 1994, we predicted seven years in the beginning, and that would have 2001. We ought to have most of it done by the Year 2000. There's going to be some carry-over on hard-to-install's. We believe that might take 8 6/9/99 FINANCE COMMITTEE, BILL 990419 some installs, but not very many, into 2001.
Just for clarification on the AMRs, once a meter is installed, should a ratepayer get a monthly reading?
There should not be any more estimated bills. Every once in a while, there's a problem with the software or with the system, and an estimated bill may go out then because of an error in technology.
Okay. I know I said I only had one question, Councilwoman, but if you'll indulge me for one other second. During the hearing on the Council Bill 22 990285, the bond refinancing -- and Mr. Martin, you may not be able to answer this question because the Finance Director, Mr. Hayllar, answered this. He informed the Finance Committee 9 6/9/99 FINANCE COMMITTEE, BILL 990419 that PGW overspent its approved capital budget for Fiscal Year 1998 by $7 million.
I was not at that hearing, Vice Chairwoman Tasco, so I don't know the specifics of that. What I can tell you is that our forecasted spending -- capital spending for Fiscal Year 1999, at this point, if we spend at the levels that the various departments have projected, that we may overshoot the budget by about that amount of money. But as of right now, we have not done that. And we're going to do everything that we can to contain our spending to within the authorized capital spending level. And what I will also say is that to the extent that we feel that we will not be able to do that, we would come back to the Council for authorization to lift that capital spending.
You said '99. What we might do is ask Mr. Hayllar to respond to this because the year was 1998, not 1999.
So what we'll do, Madam Chair, is ask Mr. Hayllar to respond to his 10 6/9/99 FINANCE COMMITTEE, BILL 990419 statement in terms of the overspending in 1998. And if so, what were the budget categories that the company overspent on, and what do you plan to do to deal with the overspending?
Vice Chairwoman Tasco, I can tell you right now that as of now April 30, 1999, the approved capital spending was $79,579,000. We have spent to date $72,584,000. We are right now about $6.99 million below the authorized capital spending level as of April 30, 1999.
Okay, thank you very much. Are there any deviations in this budget from what you've submitted to the Gas Commission?
Thank you very 11 6/9/99 FINANCE DEPT. Public Meeting much. Any other questions? (No further questions.)
I've got to get one more person for our quorum. Let me get the Council President again because Councilman Cohen just stepped out. Councilman Mariano, would you sit in for the vote. We'll make him a member for purposes of a quorum. Our public hearing is now recessed for Bill No. 990419. - - -
We will now entertain a motion for a suspension of the rules and we are now entering committee meeting so that this bill may be reported out of committee. May I have a motion with regard to Bill 20 990419, that it be reported out of committee and that the rules of Council be suspended so as to consider it at our next hearing?
All in favor? 12 6/9/99 FINANCE DEPT. Public Meeting Opposed? The ayes have it and the bill is reported out. Thank you members. Thank you, Councilman Mariano. (Adjourned at 3:01 p.m.) - - - 13 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, June 9, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON FINANCE BILL NO. 990149 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter