The Philadelphia Inquirer Jane M. Von Bergen column
Feb. 07--About this time two years ago, Philadelphia Gas Works chief executive Craig White was in the middle of negotiations to sell PGW to a utility company in
The PGW deal fell apart in December 2014, and now, a little more than a year later, the 180-year-old, city-owned utility is playing catch-up -- embarking on new business ventures and an accelerated schedule of replacing its brittle cast-iron pipe infrastructure.
"We had a number of things on hold during the sale process, which we're now addressing with vigor," said White, 59.
"When you have something that is that much of a distraction, it impedes advancement of the utility," he said. "Once we got past the sale decision, it really opened things up again."
Would you explain PGW's basic business challenge?
As far as a city, we haven't grown a lot. When I started here [in 1980], we were about 500,000 customers and we're about 500,000 today. We have over 85 percent saturation of all heating in the city. PGW's revenue opportunities are not necessarily in expanding our residential market.
What are your options?
We are in the process of advancing our liquefied natural gas (LNG) capabilities. We had one of the largest facilities in the country until maybe a decade ago when some of these large export facilities started to get built, but we're still a very large facility.
So what you have now is plenty of storage space, but it's underutilized, at about 50 percent capacity.
We have the capability to expand. Other entities that want to get into this business have to build storage tanks.
Do they cost a lot to build?
They're extremely expensive. Also, it's extremely difficult to site it. It has to have support of the local jurisdiction.
Is the goal to bring in more gas?
You have to be able to liquefy it. We've been liquefying natural gas since 1970. The expansion that we're talking about is to build a second liquefier.
How much would it cost? How would you pay for it?
From $120 million to $240 million. We're going to put in a request for a proposal. What we want to do is develop the opportunity that has a risk profile that we can accept, a cost that we can incur and a revenue stream that maximizes the asset.
Who would buy the LNG? What is the 50 percent used for now?
The tanks were originally built so that we would be able to meet peak winter demands. When we have warm winters, we stockpile it. Not last winter, but two winters before that, we were selling LNG by the truckload. We sell it to entities that were [selling it] to long-haul trucking. There are a lot of long-haul truckers using LNG now.
It sounds so epic when you have a plan to replace cast-iron pipes over 137 years.
It was actually 137, down to 88, down to 48.
If these pipes are so dangerous, 48 years seems a bit long. Your plan would outlive both of us.
It's a matter of risk and how much you can afford. Before we expanded the program, we were replacing 18 miles [a year] of what we considered the riskiest pipe in the city.
How many miles are there all together?
1,500 miles of cast-iron pipe. With the heightened awareness [of the dangers], we have been asked to remove the most-risky pipe in a more expeditious manner, 31 to 45 miles a year.
PGW's possible sale and the associated politics made headlines for a year.
The way I look at it is, we're owned by the
City of Philadelphia
and our boss is the mayor. Where I stand on it is we're going to keep this utility in a position that this mayor has the flexibility to do whatever he wants going forward.
We're going to keep it running as a well-run, financially stable organization. If he decides to continue to keep it, that's great. If he decides to sell it, it will be in a position that he can still sell it.
What are you hearing from Mayor Kenney?
The mayor has been very clear with me that he does not want to sell the utility.
Interview questions and answers have been edited for space.
Title: Chief executive, president, since 2011.
Home: Northern Liberties
Family: Children, Craig, 34, Ashley, 31.
Diplomas: William Tennent High School; Kutztown University, business; Drexel University, master's in business.
Off duty: Golf, kayaking, fishing, bird watching, bike riding, pheasant hunting.
Pedigree: White's father worked in a union job, then advanced to management. White started at PGW in accounting in 1980.
On TV: The History Channel, Flip This House.
Stove at home: Gas. "I keep it spotless."
Governance: Philadelphia Gas Works run by city through the Philadelphia Facilities Management Corp.; Pennsylvania Public Utility Commission sets rates.
2015 dollars: $20 million net on $697.2 million in revenues.
Next: PGW will soon add $1.65 (average per month) to customers' bills to accelerate pipe replacement.
PGW's CEO: How to get along with your union. www.philly.com/jobbing
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