(Philadelphia, PA – December 22, 2006) – The Philadelphia Gas Works (PGW) today filed a request with the Pennsylvania Public Utility Commission to increase its distribution charges to cover certain operating expenses that have increased substantially since PGW’s last rate increase. The increase is needed to assure that the city’s natural gas system continues to remain safe, reliable and financially viable.

“While PGW has reduced most of its operating costs, other issues such as interest on debt, pension and health care have increased for PGW just as they have for many other large corporations,” said Doug Oliver, PGW Director of Corporate Communications. “The overwhelming majority of PGW’s operating costs are fixed. So while PGW continues to identify efficiencies and cost savings, we simply can’t generate enough savings soon enough to avoid having to request the rate increase.”

If the request is approved as filed, it would increase the bill of a typical residential heating customer by about 9.3 percent, effective February 20, 2007, but it is unlikely that the increase will affect this winter’s bills.

“Assuming that the PUC schedules hearings to review PGW’s request, that review process would delay any increase ultimately allowed by the Commission beyond the winter period,” said Oliver. “Although we are mindful that any increase is unwelcome news for our customers, it should be noted that PGW has not asked for an increase to cover operating costs since 2002.”

Without an increase, PGW could suffer severe financial setbacks that would affect its ability to function. This rate increase is part of the re-engineering of PGW to allow continuation of the progress at the Company. Funds would be used not only to pay the increased operating expenses, but to reduce the amount of expensive debt carried by PGW, thus reducing costs to customers.

“Meanwhile, as far as this winter’s bills are concerned, PGW has twice lowered rates by a total of about 8 percent to reflect lower natural gas prices since June,” Oliver said.
If PGW’s entire request is approved, it would increase annual revenues by $100 million. It would have the following effect on customer bills:

• The total bill for a typical General Service (GS) Residential Heating Customer using 89 thousand cubic feet (Mcf) of natural gas per year would increase from $144 to $157 per month or by approximately 9.3%.

• The total bill for a typical GS Commercial Heating Customer using 444 Mcf of natural gas per year would increase from $680 to $769 per month or by approximately 13.2%.

• The total bill for a typical GS Industrial Heating Customer using 1,185 Mcf of natural gas per year would increase from $1,815 to $1,984 per month or by approximately 9.3%.

Customers may obtain more information by calling PGW at 215-235-1000. Material explaining the requested increase as filed with the PUC may be reviewed Monday through Friday from 9 a.m. to 5 p.m. at PGW’s main office, 800 W. Montgomery Avenue in North Central Philadelphia.

A statement of reasons explaining why PGW requested the rate increase is available upon request. Complaint forms are available from the PUC at PO Box 3265, Harrisburg, PA 17105-3265.

Complaint forms can be obtained online at: http://www.puc.state.pa.us/general/onlineforms/pdf/official_complaint_form_final.pdf

Information also is available by calling the PUC at 1-800-782-1110.

Founded in 1836, PGW is the nation's largest municipally owned natural gas utility, serving more than a half million customers in the City of Philadelphia.