Council awards Mass. consultant $425K to review PGW sale

Posted: April 02, 2014

Philadelphia City Council, which must approve the proposed $1.9 billion sale of the Philadelphia Gas Works, will pay a Boston-area consultant $425,000 to review the deal.

Council President Darrell L. Clarke said Monday that Council would pay Concentric Energy Advisors Inc. $225,000 to review details of the proposed sale, as well as $200,000 for a second contract exploring alternatives to a sale.

The consultant's reports are likely to play a crucial role in Council's approval or rejection of Mayor Nutter's proposed sale of PGW to UIL Holdings Corp., a Connecticut energy company.

Council announced in December that it would seek professional advice to evaluate the complicated transaction. Under the sales agreement, UIL can exit the deal if Council has not approved the sale by July 15.

The sale, which is expected to close in the first quarter of 2015, also requires approval of the Pennsylvania Public Utility Commission.

Concentric, based in Marlborough, Mass., is a national firm that provides financial, regulatory, strategic and litigation advice to clients in the power and gas utilities industries. The firm is headed by John J. Reed, a Wharton School graduate with 35 years of experience in the utility sector.

Nutter wants to sell the 176-year-old utility to exit the "noncore" energy business and use the proceeds to reduce the city's pension obligations. The sale is opposed by the gas workers' union, low-income advocates, and opponents of private ownership.

According to a notice posted on the city's eContractPhilly website, Council chose Concentric over nine other consultants that sought one or both of the PGW advisory contracts: Enovation Partners; Estrada Hinojosa & Co.; Fineman Krekstein & Harris P.C.; Integrated Transport Planning Inc.; Janney Montgomery Scott L.L.C.; NW Financial Group L.L.C.; Ponderosa Advisors L.L.C.; Samuel Hopkins; and the Brattle Group Inc.

The Concentric contracts, which will be paid out of city funds, are separate from more than $2 million in contracts the city-owned utility signed with legal, communications, and financial advisers.

In addition, the investment bankers that brokered the auction, JPMorgan and Loop Capital Markets, would receive more than $12 million in fees if the sale is completed.

215-854-2947 @maykuth

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