With the headquarters of the Philadelphia Gas Works as a backdrop, Republican mayoral candidate Sam Katz had the perfect foil yesterday.

Using the embattled city-owned utility as a whipping post for the political sins of Democratic control of City Hall, Katz charged: "This is an agency that since 1972 has been viewed by City Hall as a political play toy. There has been far too much abuse of the patronage system. There has been too little attention paid to serving customers."

Last week, PGW officials said as many as 16,000 customers may have been getting free gas for many months, perhaps years, because PGW didn't bill them. The revelation came as the gas commission held public hearings on PGW's proposed $469 million operating budget and $60 million capital budget.

If elected mayor, Katz promised "dramatic change" at PGW, including the possibility of hiring a private firm to manage the gas works or even outright selling it.

Some change is already underway. Currently, the gas commission is charged with approving the rates PGW charges customers, riding herd on the utility's managers and handling consumer complaints.

But next July, the state Public Utility Commission will assume the lion's share of regulating the city-owned gas works, setting rates and relying on its consumer affairs office to resolve consumer complaints.

Katz called that impending regulatory change the "perfect opportunity" for city officials to reassess PGW's management. He said his objective was to achieve rate reductions - possibly as much as 20 percent - for PGW's customers, provided the utility "was operated efficiently, if the management was professional, if the politics was removed."

Asked how serious he was about privatizing the gas works, Katz said, "I'm very serious," noting that in most major U.S. cities today gas service to residential, commercial and industrial users is delivered by investor-owned utilities.

Katz did not directly criticize Mayor Rendell for the litany of management problems and examples of waste and abuse exposed by the Daily News over the past year. But he did say higher gas rates in the city exact a cost on both residents and small businesses and were a factor in the loss of thousands of jobs and residents in the 1990s.

He also said he did "not support any significant extension" of interim PGW president Ben Hallyar's term beyond the end of the Rendell administration.