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Secret plan to privatize Philadelphia Gas Works?
One week after Sam Katz suggested privatizing Philadelphia Gas Works to shore up the city's underfunded pensions, City Paper has discovered that Mayor Michael Nutter has been quietly exploring doing just that.
Secret plan to privatize Philadelphia Gas Works?
One week after Pennsylvania Intergovernmental Cooperation Authority chairman Sam Katz suggested privatizing Philadelphia Gas Works to shore up the city's underfunded pensions, City Paper has discovered that Mayor Michael Nutter has been quietly exploring doing just that.
On July 8, 2010, the city announced it had commissioned financial advisers Lazard Ltd. to assess the feasibility of selling or leasing PGW, appropriating $200,000 of ratepayer funds and an additional $900,000 for a possible phase two study.
Nutter was unwilling to discuss the plans. According to a terse email from spokesperson Katherine Martin, "The city is constantly reviewing its assets, and this study is another example of the city's diligence and deliberativeness."
The report was expected by Oct. 15, 2010, but now it's not known when it will be completed.
Proposals to privatize PGW surface regularly. It was Public Financial Management, a firm Katz founded, that in 1999 reported that the city could make between $128 million and $528 million from a sale — but only if rates were not reduced, "significant" layoffs were put into effect, and social programs that provide subsidized gas to the poor and elderly were "essentially eliminated."
"The consequences of eliminating those programs would be tremendous social costs," says Philip Bertocci, a Community Legal Services attorney and public advocate for PGW ratepayers.
There's not much fat left to cut, since PGW already trimmed personnel by nearly 40 percent since 1988 and boosted the collections rate to more than 98 percent. PGW is still loaded down with $1.217 billion in long-term debt, though at least they're now not paying off all that debt with new debt.
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