A former Peco executive took the witness stand yesterday in the corruption trial of former state Sen. Vince Fumo to explain how the veteran politician took on the utility giant and came away with $17 million for a South Philadelphia nonprofit run by his staff and allies.

Prosecutors asked former Peco Financial Officer Thomas Hill whether the company would have given any of the funds to Citizens' Alliance for Better Neighborhoods if they knew any of it would benefit Fumo personally.

"No," Hill said quickly.

Defense attorney Dennis Cogan sought to show that Fumo's intervention in a complicated deregulation case and subsequent merger proposal netted big savings for customers, and that the grants to the Alliance were "pennies on the table compared to the billions of dollars at stake."

Fumo and co-defendant Ruth Arnao, former Citizens' Alliance director, are charged with using the nonprofit's funds for personal gain.

Hill said that Fumo and Christopher Craig, his Senate staff attorney, were key players in a complicated 1997 deregulation case, working closely with consumer advocates to get savings for rate-payers.

Hill testified that when a final settlement was reached, Fumo sought and got Peco's commitment to give $1 million a year for three years to Citizens' Alliance.

After another battle over a proposed Peco merger with the Chicago utility Unicom, Hill said that Craig called with another request: To extend the annual $1 million payments to Citizens' Alliance for another four years.

"I told him I wasn't very happy about that this late in the process," Hill said, but in the end Peco agreed.

As part of the negotiations over the deregulation case, Peco had also agreed to Fumo's request to bury its power lines in the Spring Garden community where Fumo lived.

Hill testified that when that proved impractical, he suggested donating the $10 million budgeted for the project to a Spring Garden community group as an alternative.

Fumo's staff suggested that the money go to Citizens' Alliance instead, Hill testified.

Defense attorneys argued in their opening statements that Citizens' Alliance was legally entitled to provide some compensation to Fumo, since he was in effect the organization's prime fundraiser and benefactor.

Previous trial testimony has indicated that Citizens' Alliance did not declare any compensation to Fumo on its tax returns.

Prosecutors believe that Hill's testimony showed that Fumo used his position as a state senator to intervene in the Peco cases and parlay the result into allegedly illegal perks from Citizens' Alliance.

Defense attorneys say that they will produce rebuttal testimony about the Peco deal, showing that Fumo engaged in a fair, above-board negotiation to benefit the utility's customers. *