By scaling back a record rate hike, Harrisburg utility regulators may think they've done a favor for the 500,000 customers of the city-owned Philadelphia Gas Works.
Without question, their decision provides short-term relief. Rather than a $156-a-year increase for the typical home customer, their rates will rise by only about $57.
So what's the problem? The problem is, that piddling increase of 3 percent - the first rate hike in four years - will do little to resolve the Gas Works' long-standing fiscal woes.
As PGW goes deeper in the hole - it's already swimming in $1.2 billion of debt - its customers will be asked to foot bigger and bigger bills through future rate hikes.
Acting as the state Public Utility Commission (PUC) did on Thursday makes no sense.
Granting the Gas Works a rate increase that's only a quarter of the amount the utility requested nine months ago appears to be a head-in-sand approach.
Even discounting for the fact that PGW officials might well have padded their $100 million rate request, what they received from the PUC isn't even half a loaf.
Ironically, the full 8-percent rate increase sought by the utility wouldn't have raised home customers' bills beyond what they were two years ago, Gas Works officials say. That's because the cost of natural gas itself has fallen sharply since then.
No one likes a rate increase, but the Gas Works - like every other business - needs an occasional infusion of new revenue to cover growing expenses.
For PGW, it's not only staffing costs but also the expense of safely maintaining hundreds of miles of aging pipeline. Should gas utility officials cut costs too much, things could blow up in their face (literally). Plus, there's the fiscal challenge of serving thousands of low-income customers in the city who aren't always able to pay their bills on time.
The PUC rate decision is a strange means of rewarding the careful management of Gas Works chief executive Thomas Knudsen. He's enabled the utility to improve bill collections substantially - to almost 97 percent last year. Indeed, Knudsen's stewardship of the Gas Works should stand as one of Mayor Street's milestone achievements.
Knudsen's credibility should have been enough to earn him a fair hearing in Harrisburg for the Gas Works' financial strategy. That plan was to use a portion of the $100 million originally sought in higher rates to pay down the utility's staggering debt.
Knudsen likens the utility's current situation to a payday-loan customer. He says PGW is the wage earner who never gets ahead because he keeps borrowing to meet everyday expenses.
It's well and good that PUC chief Wendell F. Holland views a sale of the city-owned utility as the real solution. But there's a big obstacle to that: PGW's massive debt.
State utility regulators need to figure out how they can help revive the Gas Works, not merely keep it on life-support.