PGW's Financial Woes Not Related to CDR Scandal

by KYW's Mike Dunn

PGW officials say a financial deal that went sour -- and is now costing customers -- was not related to the federal pay-to-play probe of the financial firm CDR.

As first reported in Sunday's Inquirer, CDR was one of the firms contracted by the city to arrange a complicated deal for PGW known as an interest rate swap.

That deal went bad and its failure was part of what led the PUC to approve an emergency rate increase for PGW last month.  PGW Vice President Steve Hershey says he's not aware of any linkage to CDR's role in this deal and the federal probe of the firm:

"It was the economy -- the broad economic meltdown -- that  created the problem for PGW and the city, and many, many others. It had nothing to do with CDR."

And Hershey says the PUC will re-examine the emergency rate increase at year's end.