Apr. 25--THE AVERAGE PGW heating customer pays $357 - 18.5 percent - of his or her annual $1,931 bill to subsidize the city- owned utility's social programs and deadbeats who don't pay their bills.

Those statistics offer cold comfort to the city's price-shocked ratepayers, whose gas bills have more than doubled since 2002, when the average annual bill was just $870.

The social programs include subsidies for the poor and the elderly and for weatherization efforts.

PGW officials now say that because of soaring natural-gas prices, the social programs no longer make fiscal sense as the utility's paying customers, including thousands of working poor, face an ever greater burden.

PGW officials declined comment on what the company will do to address the growing gap between the haves and have-nots. They said they're in the early stages of making proposals for change to the Pennsylvania Public Utility Commission (PUC).

"This is a social problem and not a utility problem," said PGW President Thomas Knudsen. "At the very least, there should be a public discussion of this."

Alone among large, urban gas utilities, PGW's service area stops at the city line. The city has the largest number of low-income customers and welfare cases of any gas utility in Pennsylvania. And only the city and PGW ratepayers bear the burden of operating what in effect is a city department.

By contrast, Peco Energy, the electric utility, has more than 480,000 paying customers in the Philadelphia suburbs.

The most costly of PGW's social programs is its Customer Responsibility Program (CRP), which subsidizes about 70,000 of an estimated 150,000 low-income customers.

Looking at the current data, Knudsen said, "We have a $93 million transfer [in CRP costs] from those who pay their bills to those who [can't]."

Two years ago, the city engaged in a brief but bitter debate about a PGW proposal that would have added an $80 annual surcharge on paying customers to help defray the burgeoning cost of the company's social programs.

In the end, the proposal died. "What we were seeing then was a rounding error compared to what is now happening," Knudsen said.

Since 2003, the rising cost of natural gas has pushed the cost of the CRP from $33 million to the $93 million cited by Knudsen. Where the average social cost including bad debt was $272 in 2003, it's projected to be $357 this year - an $85 increase.

When the CRP began in 1989, the goal was to provide gas service to customers whose incomes were at 150 percent of the federal poverty level or below.

Knudsen said the CRP's original premise was two-pronged: It was better for the city and the company if a low-income participant paid enough to cover the cost of the commodity plus a tiny contribution to the utility's fixed costs.

"It was a good program as long as the cost of gas didn't escalate," he said. "When the prices started to rise in 2002, the policy never changed with it and at the same time federal funding remained flat."

According to a February report by a consultant hired by PGW, the CRP covered just 79 percent of the cost of gas in 2005. And by January, the report estimated, the CRP covered only 39 percent of the cost of gas service, which includes company overhead.

"The camel's back is definitely broken," said Janet Parrish, executive director of the Philadelphia Gas Commission. "The more people that you sweep onto CRP, the more of a subsidy issue you have. A different approach has to be found."

Parrish said the city and state need to re-examine the responsibilities of PGW customers in relation to the government's larger social responsibilities in dealing with poverty and joblessness.

City Councilwoman Marian Tasco, who chairs the Gas Commission, said the city needs a giant infusion of well-paying jobs. But that will take years. In the meantime, she said, "The state needs to step up a little more."

The Rendell administration has made a first-ever $19 million supplement to the federal energy-assistance program (LIHEAP). PGW officials fear that the money, along with a new infusion of $50 million in federal funds, may not be entirely spent in the current heating year.

A spokesman said the Rendell administration expects to spend most of the $19 million, though there will be "carry-forward" to next year in the new federal funding.

Knudsen said the state should consider a new kind of subsidy for utilities like PGW, "something outside of all the programs now existing," he said.

The PGW consultant's report notes that New Jersey runs a statewide low-income program that redistributes ratepayer funds, about 1 percent of the monthly gas bill, from more affluent to less affluent areas.

For Philadelphians, the burden of providing gas service to the poor would be spread wider than the city ratepayers if such a program were adopted by the PUC, the consultant noted.

Steven Hershey, a PGW vice president, said social programs like PGW's exist at other utilities.

"The fundamental difference is driven by the demographics and economy of our service territory," Hershey said in a written statement.

Among the solutions he suggested are increased LIHEAP funding and more money to help low-income homeowners improve the energy efficiency of their homes.

He also raised the issue of merging Exelon's Pennsylvania gas customers with PGW under a state authority.

Meanwhile, City Councilman Brian O'Neill said he may pressure the state legislature to grant PGW permission to place information on monthly bills about how much the utility spends on customers who can't or won't pay their bills.

In July 2004, such legislation took effect without Mayor Street's signature, but PGW said only the PUC can order the company to put that information on a customer's bill.

Hershey said PGW asked the PUC staff about the change.

"What we heard back was in the nature of a guffaw," he said.