Advocates make last-ditch effort to stall mayor’s appointment for Philly gas utility CEO

A last-minute campaign is shaping up to challenge the appointment of Seth Shapiro as the chief executive of Philadelphia Gas Works by advocates who say the city should conduct a formal search for the $450,000-a-year job.

Two retired PGW executives and a coalition of environmental advocates are pressing the Philadelphia Gas Commission to delay the appointment of Shapiro initially as chief operating officer (COO), and next year as chief executive officer of the city-owned utility. The gas commission is scheduled to vote on the appointment, endorsed by Mayor Jim Kenney, at its meeting Tuesday.

“The gas commission should suspend the proposed appointment and direct the Kenney administration to conduct a transparent and public search for these vital roles,” a coalition of 17 environmental and social advocacy groups said in a letter to the five-member gas commission.

Shapiro, 49, is an executive at a real estate development firm who has served for more than a decade on PGW’s board of directors, including nearly five years as chairman. He stepped down several months ago from the board, which is formally called the Philadelphia Facilities Management Corp. (PFMC). The board then nominated him to the chief executive officer’s position.

“I don’t know whether Seth is the right guy or not, but I don’t think the process has been done correctly,” Thomas Knudsen, who retired in 2011 as PGW’s chief executive, said in an interview Monday.

Knudsen wrote a recent Inquirer op-ed saying the gas utility was at a critical crossroads, but he stopped short of questioning Shapiro’s appointment as CEO. On Monday, however, he expressed concern that Shapiro’s lack of utility operating experience would put the utility and the city at risk at a time when many PGW managers are retiring.

“He’s very, very smart,” Knudsen said. “He’s quite attuned to the issues of Philadelphia, which any person in that role needs both as CEO and COO. But he doesn’t have any operating experience.”

PGW, the nation’s largest municipal gas utility, had $685 million in revenue last year and about 1,600 employees. It is perennially challenged by aging infrastructure issues and a large number of low-income customers who struggle to pay their bills.

Shapiro is set to step into the role of chief operating officer of PGW on Jan. 4, at a salary of $375,000. On Dec. 1, 2021, he would take over from Craig E. White, who is retiring as CEO.

Kenney on Sunday wrote to the gas commission, which is chaired by Councilmember Derek Green, and called Shapiro the “ideal candidate” for the post.

“Seth is a well-respected member of our civic community, and since announcing his appointment to this role I have been heartened to hear the positive reception he has received from all sectors of the city, including labor, City Council, our business sector, and neighborhood organizations,” Kenney said.

But not everyone is on board. Steven Hershey, a retired PGW vice president for regulatory and external affairs, wrote a letter published in The Inquirer on Monday that likened Shapiro’s appointment to “old-style insider politics” and called for the city to conduct a formal search.

“Shouldn’t there be an effort to find the person best equipped to serve PGW and its customers and owner?” wrote Hershey, who formerly served as ratepayer advocate for Community Legal Services.

Andrew Stober, the former city chief of staff of transportation and utilities, said he was involved in executive searches for the new Philadelphia International Airport chief financial officer and the Philadelphia water commissioner, which ended with outside hires. He said the same could be conducted for PGW.

“Philadelphia has a strong and recent track record of attracting infrastructure leaders with national searches,” Stober said. “The airport CEO was recruited as part of national search for a CFO. The Kenney administration’s appointment of a new water commissioner was the result of a national search. Attracting experienced and diverse talent should not be a challenge.”

PGW’s proposed chief executive pay is at the upper end of the salary range for chief executives of municipal electric and gas utilities in Nashville; Seattle; San Antonio and Austin, Texas; and in Long Island, N.Y., according to advocates of conducting a search. Their salaries range from $300,000 to $485,000.

Kenney, in his letter to the gas commission, said that past PGW executive searches did not yield satisfactory results.

“Historically, PGW has not fared well when recruiting leadership from the outside,” Kenney wrote. “In addition to having unmeetable salary demands, these candidates have not had an appreciation for the unique nature of PGW’s governance structure, and the needs of city residents.”

Shapiro, who is chief operating officer of Blue Bell development firm the Goldenberg Group, declined to comment Monday. In a recent Inquirer interview, he said the skills he has developed in real estate development would be useful for navigating the political and bureaucratic landscape that confronts the PGW executive.

“The organism that is PGW is so nuanced and so different than [at] any other gas utility,” Shapiro said. “It’s the combination of the different layers of governance. It’s the focus on the public good rather than shareholder good, so you need someone who understands the city and understands the organism.”

CEO White said Monday he offered to stay on for the next two years to provide Shapiro with more time to learn how the gas utility operates.

“I don’t have anything negative to say about Seth at all,” said White. “We have a great rapport. If somebody’s been on your board for 16 years, you know him pretty well. I have a good impression of his knowledge of the business. My concern is that the operating experience isn’t there.”