Posted on Fri, Oct. 3, 2008 PhillyDeals: Peco meets with Rendell to
talk rate hikes Peco
Energy Co. says it
and other utilities have been meeting with Gov. Rendell and legislators
in Harrisburg to negotiate ways to boost electric rates. Rendell wants "to
take action before the current legislative session ends" next week, Peco
said in a filing with the Securities and Exchange Commission. Peco filed this
lobbying disclosure in response to a story by Peter de Coursey of Capitolwire.com,
a pay-for-news service, which detailed several legislative alternatives, all of
which would mean higher electric prices for consumers. According to
Capitolwire, "the latest proposal" would phase in higher rates over
four years, boosting Pennsylvanians' utility payments $2 billion in the first
year and $11 billion over five years. "There is a good
chance that a solution can be reached that would be acceptable to Peco,"
the company added. Rendell is hopeful the increases will be phased and
manageable, said spokesman Chuck Ardo. Rendell's in a hurry
because electric-rate caps from the 1990s expire soon, and utilities want to
cover their higher costs. Legislators know that if rates rise too fast, voters
will be furious; not enough, and utilities may appeal to regulators or courts
for payback. "Rendell ignored
this problem for years. Now he's getting out front on it and trying to arrange
a deal where unjustified rate increases will be phased in, so he can claim he
saved ratepayers from a shock," said David Hughes, executive
director of Citizen Power, a Pittsburgh nonprofit organization.
("Rendell's been talking about energy for quite a while," Ardo said.) Hughes said big
increases weren't fair because power companies are profitable. And he cites
federal Department of Energy data that show the state's generators produce
nearly one-third more power than state residents and businesses use, on average. In normal
times, it costs more to sell stock than to borrow money because stock is more
volatile and shareholders expect a higher return, said Scott Hastings,
equity analyst at Delaware Investments, of Philadelphia. But, he said, "in
the current environment, debt has become scarce, and lenders are being much
more cautious, so the cost to borrow has increased significantly." Some companies turned
off by the high price of credit are selling stock. Liberty Property Trust,
of Malvern, said it would raise about $150 million by selling 4.8 million new
shares. The stock dropped 8
percent on that news, but at least four other real estate investment trusts
have sold shares in the last week; big companies such as General Electric
Co. are also offering shares. Even the credit markets
aren't closed for companies with blue-chip customers. PRWT Services Inc.,
a Philadelphia company that does customer service for government agencies and
recently took over a Merck & Co. Inc. drug plant, says it raised $53
million from Structured Growth Capital Inc., of Jenkintown, on
Wednesday. The cost to PRWT: less than 10 percent, said managing partner Barry
Edelstein. Structured has raised
$3 billion from public companies, pension funds, and other investors it
wouldn't name to finance clients since 2005, said Edelstein, a former Comcast
Corp. executive and small tech company chief executive officer. It's owned
by NDH Capital Corp., of Purchase, N.Y. PRWT used to fund
operations from bank lines of credit and preferred-stock sales. But vice
chairman Jerry Johnson (he knew Edelstein from their Main Line
neighborhood) says he has no plans to go back to banks. Structured "is not
intrusive," Johnson said. "They let us run our business." Separately, Puricore
Inc., a Malvern company that makes the Sterilox food-handling safety system
for supermarkets, said Wednesday it borrowed $9.74 million from Commerce
Commercial Leasing, of Cherry Hill, at 7.7 percent. |