executives were guaranteed bonuses in exchange for their of the former mayor's failedplan to sell theutility?, The Philadelphia Inquirer reported April 10.
Theproposed $1.86 billionsale was ultimatelyshot down by the inlate 2014, but the utility paid eight of its executives for a combined $333,348— or 20% of their 2015 salaries — for having supported former Mayor MichaelNutter's merger proposal, according to the Inquirer.Had the sale to UIL HoldingsCorp. gone through, the executives would have gotten bonusestotaling more than 50% of their salaries, the Inquirer reported.
Thebonuses created a financial incentive to promote the sale and were intended tokeep the executives at their job while the deal was being negotiated,encouraging stability, according to the report.
Further,the bonus plan required each executive to sign a nondisclosure agreement. DavidSeltzer, chairman of the PGW board when the plan was approved, said the secrecywas built in to prevent in-fighting between those receiving and those notreceiving bonuses, but the lack of transparency defied the oversightrequirements for the municipally owned utility, the Inquirer reported.
Specifically,PGW did not explain the bonuses in its budget proposal filed with thePhiladelphia Gas Commission, and without express permission to spend thosefunds, the utility should not have allocate its money that way, Janet Parrish,commission executive director, reportedly said in a recent letter to PGW.
Themunicipally owned utility has had financial troubles for years and hasstruggled to muster the funds to replace its aging infrastructure. Just inJanuary, the Pennsylvania Public Utility Commission voted to increase theutility's customer surcharge to help the company fund faster pipelinereplacement work. Based on the utility's 2014 replacement rate, it would takeabout 66 years to replace all at-risk pipe in the distribution system. Evenwith the higher surcharge, the projected timeline would only fall to 48 years.
?WhilePGW is better off financially than it once was, from 2004 to 2010, the utilitywas financially unableto make its $18 million annual dividend payments to the city. The city had tolend the utility $45 million to keep it afloat, dredging up questions aboutwhether Philadelphia should continue to maintain ownership.