Standard&Poor's Ratings Services has affirmed its 'BBB-' rating on Philadelphia Gas Works' (PGW) bonds issued under the 1975 (closed lien) and 1998 (working senior lien) ordinances and subordinate-lien bonds. The outlook is stable. The rating reflects: A sizable service territory (with weak demographics) that is subject to open competition for gas supply and transmission, but not distribution; Dependence on Pennsylvania Public Utility Commission (PUC) approval for base rate increases, coupled with already high rates; Improving collections, financial operations, and coverage levels, balanced by weak liquidity dependent on a commercial paper (CP) program backed by letters of credit through 2010; and Moderately high debt levels. Stabilizing the ratings are recent improvements in the collection of billed revenue, legislation providing
