Audit: Pittsburgh Allegheny County Thermal charges taxpayers more than private customers

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An audit of the semi-public company that supplies heat to more than 65 Downtown buildings, including the Allegheny County Courthouse and the City-County Building, found a history of no-bid contracts and preferential price cuts that charge taxpayers more than private customers.

Allegheny County Controller Chelsa Wagner said Pittsburgh Allegheny County Thermal needs to seek more customers and charge them fairly or risk stagnation.

Since 1992, the company's customer base has fall from 102 to 56.

"In recent years, PACT has not responded to the needs and challenges of the Downtown business district and must immediately focus on lowering costs and increasing membership," she wrote in a press release.

In a response letter, PACT President Robert L. Fazio and board chairman Robert A. Loose said all preferential rates are temporary and that the board set guidelines for their use in early 2012.

They noted in the letter that the board of directors draws members from both the private and public sector and that they are willing to consider exploring governance training sessions.

Mr. Fazio and Mr. Loose recognized the need for new members and agreed that greater cooperation with government officials could help.

"Greater collaboration with Local Government would be beneficial to both the City and all of PACT's members and lead to an expansion of PACT's member base," they wrote.

City and county buildings account for 42 percent of steam usage. Last year, the county paid PACT $2.4 million to cool and heat six buildings.

According to the audit, PACT charges the county $27.50 per thousand pounds of steam, the basic rate. But other corporate customers pay between $15.75 and $25.85 per thousand pounds, a price break PACT has handed out to keep businesses on the books.

Ms. Wagner also questioned the PACT's board of directors, saying the company has no formal director-training program and little technical knowledge on the board.

PACT is exempt from income tax and is not regulated by the Pennsylvania Public Utility Commission.

"PACT must modernize its practices and ensure its number one priority is delivering the most inexpensive rate to its customers," Ms. Wagner said in the press release accompanying the audit. "There is great opportunity and value in this type of cooperative if it is managed well. But right now, PACT must take significant steps to ensure it is an effective and efficient option for all of its current and future customers."

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Andrew McGill: amcgill@post-gazette.com or 412-263-1497.


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