(Philadelphia, PA – October 1, 2004) – The Philadelphia Gas Works (PGW) sought the help of the Pennsylvania Public Utility Commission (PUC) to collect from customers who avoid paying for the gas service they receive. Yesterday, the PUC gave PGW only limited assistance in its efforts to stabilize the Company's financial position. The PUC also rejected a joint resolution of the Mayor and City Council to allow an income-based Senior Citizen Discount.

“Customers, elected representatives and the PUC earlier this year rejected our request to raise prices to make up for losses resulting from customers who don't pay for the gas they use. Consequently, we sought modifications of nine (9) key PUC regulations that would have increased our collections by a critical $27 million. Unfortunately, the effect of the decision will only allow us the opportunity to collect up to $5 million," said Thomas E. Knudsen, PGW President and Chief Executive Officer. “We appreciate the attention given to our proposal, but the PUC’s decision will not make a sufficient difference in our collections efforts." PGW will receive a more detailed final order from the PUC and, in the meantime, will review the motion and determine what next steps to take.

Also pending is SB689, which is proposed legislation to address a broad range of these same PUC rules. "Fortunately, the legislation has passed the House and is now before the Senate," stated Mr. Knudsen. This legislation provides an additional opportunity to collect from those customers who have the ability to pay, but chose not to. That legislation would leave protections for low-income and medically-needy customers in place.

"Additionally, consistent with our promise to protect our most vulnerable customers, we have no option but to consider appealing the PUC’s decision to deny the income- based Senior Citizen Discount program," Mr. Knudsen concluded.

PGW is urging customers to bring their accounts up to date or to contact PGW’s collection department at 215-235-1777 to make a payment arrangement as soon as possible. Customers also may make payment arrangements at any of PGW’s six neighborhood Customer Service Centers.

With fuel costs continuing to remain at high levels, PGW is also urging customers to take serious conservation and weatherization measures to cut down on their energy costs. In addition, PGW is recommending that customers apply for budget billing to help spread out the cost of their heating bills over a 12-month period. Low-income customers should contact PGW at 215-235-1000 or visit PGW’s Web site, www.pgworks.com, for information on available energy assistance programs.

Founded in 1836, PGW is the nation’s largest municipally-owned natural gas utility, serving a half million residential, commercial, and industrial customers.