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November 10, 1999

Turning up the heat

PGW directors boot Martin; Hayllar scolded by Council

Yearly departed at PGW

by Mark McDonald Daily News Staff Writer

Everywhere you turned yesterday, PGW heads were rolling.

At the company's North Philadelphia headquarters, the PGW board fired the company's No. 2 exec, Chief Operating Officer Gregory Martin.

In Council chambers, PGW President Ben Hayllar had his head handed to him by irate Council members tired of hearing from angry ratepayers and not getting straight answers from the PGW brass.

Martin, who came to Philadelphia in 1996 as part of a private sector team charged with remaking the fiscally shaky utility, was given the boot for failing to inform the board of $15 million in cost overruns on a $9.7 million computerized billing system that is still a shambles and for using company funds to install expensive security equipment and ornamental lighting at his Chestnut Hill home.

Also pink-slipped was Connie Bradford, vice president for customer affairs, who was in charge of the company's call center, which has suffered historic levels of abandoned calls from irate customers concerned about faulty bills.

While Council members met for three hours yesterday ostensibly to hear testimony on the company's proposed $59 million capital budget, they hardly focused on that, preferring to slam Hayllar for the chaos and cost associated with the flawed customer software, which became Martin's undoing.

And for the first time, a minister representing a group of African-American clergy attacked Hayllar and the PGW board for what the group contends is a pattern of firing African-American PGW employees, including Martin and Bradford.

The Rev. Robert Shine, vice president of the Black Clergy of Philadelphia and Vicinity, while not accusing PGW of racism, said he sees a disturbing pattern and urged Council not to approve the city-owned utility's capital budget until the Martin ouster is reviewed.

If Martin is to be fired, he said, other PGW employees in the chain of command should also be disciplined.

Councilwomen Marian Tasco, who heads the Gas Commission, and Finance Committee Chairwoman Jannie Blackwell repeatedly told Hayllar that the buck stops with him. They wanted to know why he didn't uncover and stop the massive cost overruns.

Hayllar, named interim president last November and permanent CEO only last month, said the board and he were deceived by Martin and David Lee, the former head of PGW's computer operations who resigned last Friday.

In a written statement, PGW Board Chairman Gregory Driscoll said the billing system wasn't managed properly. "PGW holds its employees, including its most senior officers, accountable for performance to our customers. Our customers deserve a lot better than they've been getting."

City rules require that any large change in the city-owned utility's budget be approved by the PGW board. By last April, the board learned that the company had gone over budget by $3 million without getting its approval.

Despite repeated attempts to get accurate information on the billing system's cost, Hayllar said details were not provided by Martin and Lee. When the system went on line in July, problems erupted with massive numbers of billing errors and complaints to the company's phone center.

Hayllar said some employees delayed giving data to the board, hoping that Hayllar would leave the company. Moreover, the company lacked a computer-based system that would have given it up-to-date information on contract spending, he said.

When Martin was suspended by the board two weeks ago, the full import of the cost overruns on the billing system as well as the approval of home security systems by former CEO James Hawes III at Martin's recommendation spilled out, Hayllar said.

"Regrettably, we've had a culture where problems were kept under wraps in hopes perhaps that they would go away and that has proven to be an extremely dangerous practice," Hayllar said. "If people wish to conceal things, they will conceal them until they are discovered."

Hayllar also ate a little crow.

"I believe my error was to accept information that I was given without double checking it, trying to verify it," he said. "I was given incorrect information and told it was true, and obviously I'm responsible for accepting that."

But Hayllar's contrition had no effect on Tasco and Blackwell.

"You don't seem to have anybody over there who knows what they are doing," Tasco said at one point. Later, she aimed directly at Hayllar, noting that as the Rendell administration's finance director, he served on the PGW board since 1994 and as president for the last year. Hayllar "knows absolutely nothing of what is going over at PGW," she said.

Blackwell said she couldn't believe that the company had so few internal controls, and asked, "Do you think we're going to pass a budget of this size with no answers?

"We will not take dollars from unemployed people, poor ill seniors and others in this city who are having a hard time economically and we can't justify why we're doing it," warned Blackwell, who held the company's capital bill without action.

Hayllar said the cost of fixing the billing system is unknown, that he hopes to have a largely functional system by the end of the year and that the money to pay for the cost overruns was taken from other information-technology projects that were incomplete.

Hayllar said he's hired Sherry Rubin, the former chief information officer at Community Behavioral Health, to replace Lee. PGW is also paying $400,000 to two consulting firms, RAM Technologies and Mira Management, in an effort to correct its billing problems.

When Councilman David Cohen questioned whether Hawes and Martin weren't just following private industry standards by spending about $59,000 in PGW funds without board approval on the security systems and ornamental gas lighting at their Chestnut Hill homes, Hayllar said, "I don't think industry standards permit free work being done on personal residences."

Speaking for the black clergy group, Shine labeled the security spending "a meager item" and "unfounded grounds" for firing Martin."

Two of the six PGW board members are African-Americans - the Rev. William Moore and former Philadelphia Bar Chancellor Andre Dennis. The board voted unanimously for Martin's firing, Hayllar said. Bradford was replaced by Karen Sweat, an African-American who previously held the company's top sales job.

-- Homer Beanfang (Bats@inbellfry.com), November 10, 1999

Answers

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November 10, 1999

Yearly departed at PGW

Turning up the heat_PGW directors boot Martin; Hayllar scolded by Council

Here are other officials who have departed in recent years in a continuing controversy at the Philadelphia Gas Works.

JAMES HAWES III, resigned after revelations that

he charged PGW for excessive expenses.

THOMAS COLLINS, marketing director, resigned

rather than move into the city to meet the city's

residency requirement.

RAMON SHARBUTT, chief financial officer, fired

during investigation into spending excesses and cost overruns in connection with a new computer system.

DEBORAH ESTRIN, senior vice president for human

resources, fired for misusing her PGW American Express card.

SYDNEY MARIE AVENT, general counsel, resigned

after it was disclosed she had negotiated an unprecedented severance package with Hawes.

DAVID LEE, computer boss, resigned during contro-

versy over cost overruns and billing complain

-- Homer beanfang (Bats@inbellfry.com), November 10, 1999.

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November 10, 1999

Phila. Council turns the heat up on PGW

By Clea Benson INQUIRER STAFF WRITER

Philadelphia Gas Works has spent nearly $16 million over budget on a faulty new computer system that has sent inaccurate bills to thousands of customers and overwhelmed the city-owned utility's customer-service wing, PGW president and CEO Ben Hayllar told City Council yesterday.

Beyond that, he said, PGW's board and top brass were unaware of the size of the overruns as they were being racked up.

The disclosures came during a sometimes acrimonious hearing at which Hayllar asked Council to approve the utility's $59.6 million capital budget for fiscal year 2000.

Members of Council's finance committee said they would not approve any budget for PGW until they have received a written plan for more internal auditing and an explanation of how PGW plans to make up for the money that was overspent.

"You think we're going to pass a budget of this size with no answers? I don't think so," Councilwoman Jannie Blackwell, the committee chair, told Hayllar, a former city finance director who was named interim chief of the troubled utility by Mayor Rendell a year ago.

"We will not do it, sir," Blackwell said. "We will not do it."

Earlier yesterday, the PGW board fired two officials - Gregory Martin, the chief operating officer, and Connie Bradford, the vice president of customer affairs - held responsible for the new computer system.

David Lee, the chief information officer in charge of the new system, resigned on Friday.

Hayllar said yesterday that Martin was also fired because he installed security systems and ornamental lighting at his home with $17,000 in PGW funds.

Lee's resignation and the firings were but the latest departures at PGW, which has been shaken by months of allegations that top officials misused funds. CEO James Hawes 3d resigned last fall after coming under fire for overspending his moving allowance and making donations to his alma mater with PGW funds. And in January, Ramon Sharbutt was fired as chief financial officer for having improperly billed the company for closing costs on a vacation home.

An outside firm has been called in to remedy the problems with the new computer system, but PGW's billing and customer service may not be b

-- Homer Beanfang (Bats@inbellfry.com), November 10, 1999.

Hats off to you Mr. Bellfry!

Where do you get this stuff? These episodes are singularly just that -- episodes. Together they are incredibly disturbing.

I would love to see them collected and categorized.

On the other hand when they are, the sheeple will move.

Pete

-- Peter Starr (startrak@northcoast.com), November 10, 1999.

Gawd, Homer's last post took me back down memory lane! Sometimes I miss living in Philadelphia! When I was there (not that long ago) the mayor was bombing houses, the bond rating was below zero, all city telephones were rotary dial, and Steve Lopez's stories about the roofers, garbage collectors, the Philadelphia Parking authority and a couple female city council members also known as the "Boom Boom girls" kept us working folk entertained (He was and maybe still is a columnist for the Inquirer).

Unfortunately, it does get cold there and PGW appears to continue too be a weak link. The pipes under the city are really old, and the infrastructure is not good. Too bad for the good people who live there. I miss living in that city, but I don't miss having my poor car trashed every month. Yo

By the way, Homer, your hard work is appreciated. thanks

-- Nancy (wellsnl@hotmail.com), November 10, 1999.

"Everywhere you turned ... heads were rolling ... fired ... irate ... tired of hearing from angry ratepayers ... not getting straight answers from ... brass ... given the boot for failing to inform ... $9.7 million computerized billing system that is still a shambles ... pink-slipped ... call center ... suffered historic levels of abandoned calls from irate customers concerned about faulty bills ...

slam ... for the chaos and cost associated with the flawed customer software ... undoing ... in the chain of command should also be disciplined ... why he didn't uncover and stop the massive cost overruns ... deceived ... former head of ... computer operations who resigned ... billing system wasn't managed properly ... accountable ... gone over budget by $3 million without getting its approval ... Despite repeated attempts to get accurate information on the billing system's cost ... details were not provided ... When the system went on line in July, problems erupted with massive numbers of billing errors and complaints to the company's phone center ...

... some employees delayed giving data to the board ... lacked a computer-based system that would have given it up-to-date information on contract spending ... suspended ... full import of the cost overruns on the billing system ... spilled out ...
"Regrettably, we've had a culture where problems were kept under wraps in hopes perhaps that they would go away and that has proven to be an extremely dangerous practice" ...

... error was to accept information that I was given without double checking it, trying to verify it ... I was given incorrect information and told it was true, and obviously I'm responsible for accepting that."

... don't seem to have anybody over there who knows what they are doing ... aimed directly ... "knows absolutely nothing of what is going over at PGW ... couldn't believe that the company had so few internal controls ...

... cost of fixing the billing system is unknown ... hopes to have a largely functional system by the end of the year ... money to pay for the cost overruns was taken from other information-technology projects that were incomplete ...

... also paying $400,000 to two consulting firms ... in an effort to correct its billing problems ... questioned ... voted unanimously for ... firing ...

THE BUZZARDWORDS OF THE NEAR FUTURE

-- Ashton & Leska in Cascadia (allaha@earthlink.net), November 10, 1999.

Probably just an isolated case.

Right.

-- Sam (Gunmkr52@aol.com), November 10, 1999.

What the heck -- fix on failure, that's the ticket...

Atlanta appears to be in much the same condition. Old infrastructure, incompetent management, cronyism, whatever.

-- Tom Carey (tomcarey@mindspring.com), November 11, 1999.

Calm down people. Just give us a little time to switch back to manual and we should have this fixed in uh two or three days at the most

-- fixed in (threedays@the.most), November 11, 1999.

Philadelphia sounds like a good place NOT to be this winter. But then, neither does Atlanta. Or anyplace in the northeast. Or southeast. Or any foreign country. Or anywhere within five miles of Charlie Reuben. This is getting almost depressing.

-- I'm Here, I'm There (I'm Everywhere@so.beware), November 11, 1999.

That's okay - it's all going to be solved in three days.....

This thing is going to a disaster up there: and has y2k written all through the episode: notice the deadlines, the timing of the consultants, the installation timeframe, the complaints (at installation of the first revision of the system), the "new system" and "by the end of the year" comments..

"...largely functional by the end of the year?"

Nope.

But at least here they fired the incompentent managers early - but will that allow the problem to be fixed by the end of December?

Nope.

--- Aside: Even with incompetence so blantantly discovered, its sad to see racism brought up to interfere with the system by the Democratic ministers in the city. Can't they understand that race doesn't matter to a computer? Or when fraud is discovered?

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), November 11, 1999.

Isn't Philly one of the major cities listed as likely having water problems due to power problems, even if Philly's water system was Y2K ready? Something like there's a less than twenty-four hour supply of treated water for Philadelphia as I recall.

Well now there's no question as to whether Philly is going to have a safe, reliable water supply. If the Philadelphia Electric Company (PECO) manages to keep the juice flowing there's no gaurantee that PGW can keep the water flowing.

And the issue of natural gas isn't even discussed. Someone earlier is very correct. It's likely going to be a cold, thirsty and maybe dark winter in Philly after New Year's.

WW

-- Wildweasel (vtmldm@epix.net), November 11, 1999.

Man oh man I love it so when A&L shout from the house tops.

Lurkers take note!!!

-- D.b. (dciinc@aol.com), November 11, 1999.