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City's Effort To Sell Off PGW Gets Tangled In Purse Strings Battle

By Steve Tawa

PHILADELPHIA (CBS) -- The Philadelphia Gas Commission is trying to figure out whether it should authorize payments by the Philadelphia Gas Works to its high-powered outside advisers, who will help determine whether the city's natural gas utility should be sold to private investors.

City solicitor Shelley Smith argued today that the city negotiated favorable terms on $2.7 million worth of contracts with outside financial, legal, and communications firms to guide the city through the sale process.

But Councilwoman Marian Tasco, who chairs the Gas Commission, which oversees PGW's budget, sides with the city's public advocate, Robert Ballenger, who doesn't believe that PGW ratepayers should foot the bill for the privatization effort.

Ballenger notes that 30 percent of PGW customers are "payment challenged."  He says the city stands to benefit more if the city-owned utility is sold to private interests, so the city should pay the outside firms.

"Customers must look for assurances that neither the city administration nor any other vested interest imposes imprudent expenditures on this utility," Ballenger said.

Smith, the city's top lawyer, was asked what happens next month if the Gas Commission rejects the request to pay the outside teams?

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(City solicitor Shelley Smith. Credit: Steve Tawa)

"As my father used to say, we'll cross that bridge when we get to it," Smith (right) replied.

Investment banker Lazard Ltd. -- one of the firms that has yet to be paid -- estimated that PGW could fetch $1.85 billion.

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