The ratings on Philadelphia Gas Works' (PGW) senior revenue bonds (BBB-/Negative) and subordinate revenue bonds (BB+/Negative) reflect the weak demographics of the utility's service area, below-average collection rates, high debt levels, thin margins, and a strained liquidity position. These weaknesses are partially offset by a lack of competitors and modest levels of support from the city of Philadelphia, Pa. PGW is the nation's largest municipally owned gas utility and the only local gas distributor serving Philadelphia. The utility serves 498,000 customers and has about $1 billion in total debt outstanding. The utility's weak service territory and its low collection rates pressure its liquidity. Demographics in the service territory are weak with a declining population and below-average wealth levels. During fiscal
