By Jared Shelly
– Philadelphians are in for a big hike in their gas bills after the sale of Philadelphia Gas Works to UIL Holdings Corp. for $1.86 billion, an advocacy group is warning.
Food & Water Watch warns that if gas utility privatization is anything like water privatization, then customers will pay the price with rate increases. Sam Bernhardt, senior Pennsylvania organizer for Food & Water Watch, said that rate increases occur “time and time again” when water utilities go private. (See infographic.)
In Bensalem, Pa., a typical annual water and/or sewer bill was $137.08 before privatization but climbed to $578.05 after. In Bristol, Pa., the bill jumped from $165.44 to $661.43. After privatization in Media, Pa., water bills climbed from $335.69 to $792.22.
“We don’t have any reason to believe that in the privatization of a gas utility, we’d see anything different,” said Bernhardt, whose group has joined with a coalition of unions, consumer groups, neighborhood associations, and environmental groups to urge City Council members to vote against the sale of the utility during the approval process.
To be fair to the city, terms of the deal require that UIL not raise prices on consumers for three years and no jobs will be lost in that time. Mayor Michael Nutter said in a press conference on Monday that UIL Corp. can only raise its rates if it goes through the same process PGW would go through today.
But what happens after three years?
Bernhardt argues that UIL Corp. will be itching to make a “return on its investment.” He expects the company to do so in two ways: By cutting costs (“the easiest way to do that is to cut labor force”) and increasing revenue (“we expect them to largely do that through increased rates for consumers.”) He says that any rate freeze is just an attempt to block citizens and advocacy groups from fighting the sale.
But is it really a far cry that a private company can run PGW more efficiently? Think about paying a bill online. It currently costs $2.95 to do so, which seems pretty antiquated compared to the way many private companies allow customers to pay bills online for free.
“I don’t think there are a ton of people out there saying PGW is running poorly — its making a profit right now,” said Bernhardt. “I don’t see Mayor Nutter’s office or UIL for that matter, coming out with specific proposals on increasing efficiency.”
Public ownership of utilities is a good thing, he says, because if it goes private, citizens lose their right to speak out against company policies.
“If PGW is privatized,” he said, “We lose ability to have a public voice on the topic what gas infrastructure looks like in Philadelphia.”
Source: http://www.bizjournals.com/philadelphia/news/2014/03/03/pgw-privatization-means-higher-rates.html?page=all
