Mayor Michael Nutter announced the deal on Monday. Credit: Rikard Larma
Mayor Michael Nutter announced this morning that he has agreed to sell Philadelphia Gas Works to UIL Holdings Corporation for $1.86 billion, according to a news release.
After the city pays its bills and dues, it expects to have between $424 million and $631 million remaining that it will then use to bolster the city's pension fund, which is currently less than 50 percent funded, according to a statement.
The agreement requires that all PGW employees be offered employment at UIL, and "if an employee decides to retire or accept a job elsewhere, that position may go unfilled, but total employment may not dip below 1,350 employees for at least three years," according to the news release.
The union representing the largest amount of workers, Local 686 Utility Workers Union of America, has claimed the sale puts jobs at risk and could mean higher customer rates.
The almost 180-year-old company is the nation’s largest municipally owned gas utility with 500,000 residential, commercial and industrial customers, and more than 1,600 employees.
“When I announced nearly two years ago that the city would begin exploring the sale of PGW, I pledged that I would sign an agreement only if the terms benefited Philadelphia taxpayers and PGW customers,” Nutter said in a statement. “This agreement accomplishes those goals and much more. UIL submitted the highest bid for PGW and agreed to contract terms that were important to the city. Our agreement keeps rates frozen for three years, maintains PGW’s discount programs for low-income families and seniors, safeguards PGW employee and retiree pensions, and positions PGW to take full advantage of the abundant supply of natural gas in Pennsylvania to make our city and region a prime energy hub.”
The Connecticut-based company, which serves about 706,000 electric and natural gas customers in Connecticut and Massachusetts, boasts more than $4 billion in assets including United Illuminating Company, Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and Berkshire Gas Company, according to the release.
Once the sale is complete, UIL plans to operate dual corporate headquarters in Philadelphia and New Haven. PGW will become UIL’s largest operating company, according to the release.
The city claims about 33 companies expressed interest in the gas company.
Nutter described the interest in PGW as "overwhelming."
“We thoroughly vetted all bidders and chose UIL for a number of reasons, not the least of which was that it provided us with the strongest contract terms and value," according to a statement. "But beyond the numbers, UIL has an outstanding safety record, excellent employee and customer relations, credibility, a commitment to infrastructure improvements, and is a valued corporate citizen in the communities it now serves."
The deal is pending approval of City Council and Public Utility Commission.