Nutter pressures Council to deal with PGW sale

If UIL Holdings Corp. is allowed to buy Philadelphia Gas Works for $1.86 billion, $420 million would go into the city's pension fund.
If UIL Holdings Corp. is allowed to buy Philadelphia Gas Works for $1.86 billion, $420 million would go into the city's pension fund. (MICHAEL BRYANT / Staff Photographer)
Posted: June 18, 2014

The Nutter administration is stepping up pressure on City Council this week to introduce legislation to privatize the Philadelphia Gas Works before Council takes its 12-week summer recess.

Sale supporters, in private conversations and public commentaries, are encouraging Council members to schedule hearings on the proposed $1.86 billion sale to UIL Holdings Corp., a Connecticut utility.

"The administration is hopeful the PGW bills will be introduced in City Council this week and hearings can be held as soon as possible, and that Council will see the benefit of this sale," Mark McDonald, Nutter's spokesman, said Monday.

Council members have resisted the administration's calls to introduce the legislation until Concentric Energy Advisors, a Massachusetts consultant it retained to evaluate the sale, can finish its work.

Concentric is scheduled to brief Council members Tuesday, according to Council sources. The firm is still drafting its report.

It is a telling comment on the strained relations between the mayor and Council that the procedural act of introducing the sale legislation has become a source of drama. Privately, the administration portrays Council as dragging its feet, while Council depicts the administration as bullying.

The agreement Nutter signed with UIL on March 3 allows the buyers to back out of the deal after July 15 if Council has not approved the sale. Council regards that deadline as arbitrary.

The agreement terminates automatically on Dec. 31 if Council has not approved the sale.

Nutter says this is a good time to sell a utility that has been a headache for decades, and has the highest rates in the state despite the advantages of municipal ownership.

A sale would net the city a minimum of $420 million for the city's underfunded pension program. Private buyers say they would be able to double the rate at which PGW replaces aging gas mains.

Council spent three months evaluating proposals from consultants before announcing the hiring of Concentric on March 31. The firm will receive $225,000 to evaluate the sale process and the UIL bid, and $200,000 to study whether a sale is the best option for the city.

Concentric's proposals, obtained by The Inquirer, said the reports would be completed in six weeks. A Council spokeswoman has complained that the delays were partly caused by the administration's slow response to council's requests for data.

Council members also delayed introducing the legislation because under the sale agreement, the introduction would start a 60-day clock for the city to file the sale with the Pennsylvania Public Utility Commission, adding more pressure on Council to act.

The administration argued that it wanted to begin the PUC review process soon because it could take up to 10 months to complete.

Sale opponents are also pressuring council members to act.

The gas workers union, which is adamantly opposed to a sale, is planning a rally with consumer and environmental activists outside City Hall before the start of Thursday's council meeting. Opponents say they fear a loss of jobs, higher rates and an erosion of subsidies for low-income customers if PGW is sold.

215-854-2947 @maykuth

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