(Philadelphia, PA – March 17, 2006) – PGW and Hess LNG have ended negotiations on the proposed Freedom Energy Center, a proposed liquefied natural gas (LNG) import facility that would better utilize LNG tanks that PGW has used safely for over 30 years. The decision was made after both companies concluded that they could not agree on key terms fundamental to the success of the terminal project.

In Spring 2005, PGW began negotiating exclusively with Hess LNG (a joint venture of Amerada Hess, and Poten Partners) as a potential developer following an open RFP process. Although negotiations with this developer have ended, PGW remains committed to the development of an LNG import terminal.

PGW believes that the Freedom Energy Center is still the right project for Philadelphia. Adequacy of natural gas supply and the cost of gas are looming concerns that must be addressed. The current cost of gas, which is projected to remain high, and potential supply constraints in the future make importing LNG important to the economic stability of the region and to the financial well-being of PGW’s customers.

The proposed project could generate tens of millions of dollars in annual revenues for PGW. These revenues could serve to reduce PGW’s substantial long-term debt, reduce PGW’s obligation to borrow money for daily operations and offset PGW’s operating costs. Reducing debt and controlling operating costs would benefit PGW’s customers by helping to stabilize gas bills which have risen steadily over the last several years. The project will also provide energy security, help attract new businesses to Philadelphia, expand the tax base and create more jobs.

“The status quo is no longer acceptable. We must find ways to maximize our assets to stabilize gas bills for our customers. The Freedom Energy Center was proposed for that purpose,” commented Thomas Knudsen, President and CEO of PGW. “This specific negotiation has ended, but our intention to find creative solutions to high natural gas prices moves full speed ahead,” he added.

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