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Approving the Fiscal Year 2026 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds in connection therewith, and acknowledging receipt of the Revised Forecast of Capital Budgets for Fiscal Years 2027 through 2031, all under certain terms and conditions.
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WHEREAS, Section IV.2.b. of the Agreement Between the City of Philadelphia and the Philadelphia Facilities Management Corporation for the Management and Operation of the Philadelphia Gas Works (“Management Agreement”) requires the Philadelphia Facilities Management Corporation (“PFMC”) to prepare annually for the Philadelphia Gas Works (“PGW”) a proposed capital budget for the ensuing year and a forecast for the six (6) years comprising the ensuing budget year and the five (5) years next following; and
WHEREAS, Section IV.2.b. of the Management Agreement also requires that the proposed capital budget and forecast be submitted to the Director of Finance and the Philadelphia Gas Commission (“Gas Commission”) for their review and for submission of said budget and forecast, together with their recommendations thereon, to the Council of the City of Philadelphia (“City Council”) for its approval; and
WHEREAS, Section IV.2.b. of the Management Agreement further requires that the proposed capital budget and forecast include a showing of the amounts needed and how the funds required are to be supplied as between funds generated within the business through charges to customers or otherwise and funds to be obtained through capital loans (“Financing Plan”); and
WHEREAS, Section IV.2.c. of the Management Agreement requires that all PGW expenditures be made pursuant to approved budgets; and
WHEREAS, PGW filed with the Gas Commission on January 2, 2025, a proposed Fiscal Year (“FY”) 2026 Capital Budget of One Hundred Eighty-Five Million Nine Hundred Sixty-Two Thousand Dollars ($185,962,000) (“FY 2026 Capital Budget” or “Budget”) and a Five-Year Forecast of Capital Budgets (FY 2026 - FY 2030 (“Forecast”); and
WHEREAS, the Gas Commission’s review of said Budget proposal in its FY 2026 Budgets/Oversight Proceeding culminated in deliberations taken at a public meeting held on April 15, 2025, at which the Gas Commission endorsed a proposed FY 2026 Capital Budget in an amount not to exceed One Hundred Eighty-Five Million Two Hundred Twelve Thousand Dollars ($185,212,000) with related constraints and conditions for said Budget; and
WHEREAS, on April 17, 2025, PGW filed with the Gas Commission a FY 2026 Compliance Capital Budget Proposal of One Hundred Eighty-Five Million Two Hundred Twelve Thousand Dollars ($185,212,000) including its Financing Plan for said Budget, together with its Revised Forecast of Capital Budgets for FY 2027 through FY 2031; now, therefore,
THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
SECTION 1. Approval and Acknowledgment
Pursuant to the provisions of Section IV.2.b. and IV.2.c. of the Management Agreement, the Council:
A. Does hereby approve FY 2026 Capital Budget for PGW in an amount not exceeding One Hundred Eighty-Five Million Two Hundred Twelve Thousand Dollars ($185,212,000), as reflected in the FY 2026 Compliance Capital Budget Proposal, which includes the associated revised Financing Plan and which is attached as Exhibit #1 to this Ordinance, subject to the provisions of Sections 3, 4, and 5 of this Ordinance; and
B. Does hereby acknowledge receipt of PGW’s Revised Forecast of Capital Budgets for FY 2027 through FY 2031.
SECTION 2. Spending Authorization
The amounts shown in the approved FY 2026 Capital Budget are hereby authorized for the purposes shown and shall be available for expenditure as of FY 2026, defined as September 1, 2025 through August 31, 2026, in an amount not exceeding One Hundred Eighty-Five Million Two Hundred and Twelve Thousand Dollars ($185,212,000) as reflected in the FY 2026 Compliance Capital Budget Proposal, which is attached as Exhibit #1 to this Ordinance, subject to the provisions of Sections 3, 4, and 5 of this Ordinance.
SECTION 3. Constraints and Conditions - Capital Program Protocols
During the lifespan of the line items in the approved FY 2026 Capital Budget, PGW shall adhere to the “Capital Program Protocols” as a condition of capital budget approval. A copy of said Protocols as adopted by the Gas Commission on April 15, 2025 is attached as Exhibit #2 to this Ordinance and is incorporated herein.
SECTION 4. Constraints and Conditions - Conditional Spending Authorization for Discrete Projects
The following line items shall be approved on a conditional funding basis subject to the constraints enumerated and approved by the Commission at its April 15, 2025 meeting:
A. The line item styled “Natural Gas Distribution Infrastructure Safet and Modernization (#52-21-2-04) ($28,395,000)”;
B. The line item styled “Replace Carpets (#72-01-2-04) ($50,000)”;
C. The line item styled “Replace Modular furniture (#72-01-05) ($50,000); and
D. The line item styled “17,500 AMI Meters” (#50-30-2-01) ($2,153,000).
SECTION 5. Constraint and Conditions - Conditioned Funding Reserve
Subject to the provisions found in the “Capital Program Protocols” at Part 1 - Subpart A.6 and Part 1 - Subpart B.5, Four Million Two Hundred Fifty-Nine Dollars ($4,259,000) shall be made immediately available for expenditure exclusively for Distribution projects that exceed otherwise authorized spending for main and service additions/replacements due to cost overruns during FY 2026 upon PGW filing with the Commission: (a) confirmation that amounts available for inter-departmental or intra-departmental transfers have been utilized to the extent available and/or sufficient; (b) confirmation that amounts available for conditional funding have been utilized to the extent available and/or sufficient; and (c) detailed explanation of the circumstances necessitating expenditure of conditioned funding.
SECTION 6. Exhibits
Exhibits #1 and #2 referenced in this Ordinance and incorporated herein shall be kept on file by the Chief Clerk of City Council and shall be available to the public for inspection, reading or copying at reasonable times.
[Note: Exhibits to this Bill are on file in the Office of the Chief Clerk.]
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