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Posted on Wed, Oct. 26, 2005

PGW's spending plans for LNG put on hold


The city Gas Commission has refused to approve any more spending on a plan to ship hazardous liquefied natural gas up the Delaware River until it finds out how likely the deal is to happen - and whether PGW's hard-pressed gas customers ever will be paid back.

"I would say that this project is in lots and lots of trouble," said City Councilman Juan Ramos, after he and other members of the Gas Commission unanimously shelved PGW's request for nearly $3 million to pay for outside legal work on the project. "That is why the commission voted today not to expend a single penny till we can get more information."

For the second time in little more than a month, the commission demanded a detailed briefing from Philadelphia Gas Works officials on the status of their negotiations with an energy company that would bring massive tankers loaded with imported LNG up the Philly waterfront to PGW tanks in Port Richmond. The plan has been drawing increasing opposition in waterfront neighborhoods, where a terrorist attack might pose the risk of intense heat from a pool of fire.

Ramos predicted that if PGW and the developer can't soon step up and convince residents that the plan for an LNG import terminal is safe, the whole project would be "on its death bed."

Yesterday's budgeting stalemate followed a Daily News report of public comments by Councilman Frank DiCicco, who told a South Philly audience flatly last week that the most likely developer, Hess LNG, had pulled out of a deal.

PGW has repeatedly denied that negotiations were in trouble. Vice president David Griesing yesterday described the talks as "very active.

"We have exchanged documents and we're working on negotiating the final agreements."

PGW sees the project as "a very important part of our long-term strategy to stabilize, if not reduce, gas rates," Griesing said.

But as a result of the uncertainty over the lagging talks, Ramos said, "It is reasonable to doubt that agreement on any terms will occur in the near future."

As a result, the commission yesterday supported Ramos' motion to include none of the $2.9 million PGW had sought for outside legal work on the LNG project in a $76.4 million interim appropriation approved to tide the gas company over until Dec. 31. The commission will deal with the rest of the gas company's proposed operating budget later, and could decide to look again at the funds for legal work.

The move won't block PGW from using its own staff lawyers to pursue a contract with the would-be developer, which is generally believed to be Hess. Neither PGW nor Hess has confirmed that it's the company that's been talking with PGW for several months.

The issue of who pays for the pre-contract work on the LNG project was first raised by a commission hearing examiner, Janet Parrish, who noted that over a three-year period, PGW had budgeted a total of nearly $5 million for consulting, lobbying and legal work - a total since trimmed to about $4.6 million. Of that, about $1.7 million has actually been spent.

PGW had asked for $1.7 million in the current fiscal year, and then sought to tack on an additional $1.2 million left over from last year, for a total of $2.9 million for outside legal work in fiscal 2006. Commissioners shelved both 2006 requests yesterday, saying they didn't want gas customers to be stuck with the expense if it couldn't be recovered.

Councilwoman Marian Tasco, the commission chairperson, said the panel had been told the developer would pay back the preliminary costs so customers wouldn't be stuck with them. "But now, at this point," she said, "we are not clear that that is going to take place."

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Last modified: 22 October 2005

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