(Philadelphia, PA – January 24, 2005) –On Friday, January 21, 2005, Philadelphia Gas Works (PGW) and the Utility Workers Union of America, Local 686 ratified a new three-year labor contract, effective May 16, 2005 until May 15, 2008.

The new contract provides many of the same provisions as the current contract with the most noticeable changes being higher wage increases, (1 percent in year one, 2 percent in year two and 3.5 percent in year three) and establishing Keystone 5 HMO as the base healthcare plan, with no employee co-payments toward premium costs.

John F. Street, Mayor of Philadelphia commented, “I am pleased that PGW and Local 686 were able to reach a responsible, three-year labor contract. The Company provides a valuable service to this City and it’s encouraging to see that both PGW and its Union are pulling in the same direction to the benefit of all of its customers.

Thomas E. Knudsen, Chief Executive Officer, PGW added, “From the beginning of the negotiation, we agreed that customers were our highest priority. Having that common ground made it easier for us to hammer out the other details. This positive relationship has clearly strengthened the Company’s sustainability and prospects for longer term growth.”

The contract represents a spirit of cooperation and demonstrates an improved working relationship between the Union and PGW management that has been developing over the past several years.

Keith Holmes, President of UWUA, Local 686 remarked, “The Company is strengthened by having a good management / labor relationship and we are pleased that PGW agreed to a contract that is fair and represents a substantial step forward for Local 686 members. Ultimately, our customers will be better served and that’s a win-win all the way around.”

More specifically, the contract averted a labor action that could have been disruptive to public service.

This new labor contract is a significant milestone in a growing list of positive outcomes that PGW has experienced over the recent past. In November, legislation was passed to help the Company with its collection efforts, giving PGW the increased capacity to collect from customers who do not pay. Earlier in the same month, PGW, along with Mayor John F. Street, released a Request For Proposals (RFP) on the Freedom Energy Center project, the proposed Liquefied Natural Gas Import Terminal that would be built at the site of the existing Port Richmond Plant.

Founded in 1836, PGW is the nation's largest municipally owned natural gas utility, serving a half million residential, commercial, and industrial customers, and Philadelphia's choice for quality energy solutions.