The CreditWatch listing on Philadelphia Gas Works' (PGW) bonds reflects the need for Philadelphia Gas Works to receive a material increase in its base rates in order to continue to meet its bond covenants and maintain an adequate level of liquidity in 2002 and beyond. A final ruling on the pending rate case filed on Jan. 5, 2001, for $65 million, is expected in early October 2001 at which time Standard&Poor's will resolve the CreditWatch placement. An unsupportive regulatory outcome could result in lower ratings. In addition, the CreditWatch listing also reflects PGW's weak cash flows arising from a convergence of warmer winters without appropriate adjustments to rates, historic ongoing problems with high revenue, and the faulty implementation
