Philadelphia, July 16, 2014 – Mayor Michael A. Nutter praised the decision by UIL Holdings Corp. to continue its effort to acquire the Philadelphia Gas Works in a $1.86 billion transaction that awaits action by the Philadelphia City Council. The Mayor’s comments were in response to an announcement today from James P. Torgerson, UIL President and CEO, that the company would continue to pursue the purchase of the city-owned gas utility even though the purchase agreement agreed to last March provides that UIL can, as of today, exit the proposed sale at any time while the matter is pending before City Council.
“First, I want to acknowledge the dedication and hard work that a team of City officials and our consultants have done in presenting the data and making a convincing case for a sale of PGW and the many benefits that will flow to Philadelphians,” Mayor Nutter said. “I have spoken with Jim Torgerson and he’s indicated to me his company’s strong desire to continue the sale process.
“This incredibly important issue is squarely in front of City Council and both the Company and our Administration have been providing voluminous amounts of information to City Council and its consultant, Concentric Energy Advisors. We eagerly await Concentric’s report and the opportunity to present our case for selling PGW to City Council and the public.
“We stand fully prepared to provide Council with any further information or analysis it might need as it conducts its vital and historic due diligence on this matter. We look forward to the introduction of the legislation and the announcement of a schedule of Council hearings. Philadelphians have an absolute right to know the basic details of the transaction and how it will impact them as consumers and also how it will affect the dedicated workforce and retirees of PGW, the fiscal impact on City government and its Pension Fund and the city’s economy.”
In a statement released this morning, Mr. Torgerson said in part, “We have decided to continue our efforts to pursue this acquisition and become a new business partner in the City of Philadelphia. UIL remains ready to assist Council in its assessment of the sale, including the essential public dialogue of what we believe is a valuable economic opportunity for the City of Philadelphia. UIL will continue to evaluate the situation and take additional actions as appropriate.”
Mayor Nutter noted that UIL Holdings showed tremendous confidence in Philadelphia when it submitted the highest bid for PGW among 33 original contenders, agreed to no layoffs, a rate freeze and to maintain a PGW headquarters here. Based on a $1.86 billion sale price and after paying off all PGW’s bond obligations and putting aside funds for other potential liabilities, the City will have between $420 million and $630 million to invest in the City Pension Fund, which currently is about 47 funded.
“In the purchase agreement, we required strong protections for low-income consumers and seniors. We made sure there are strong protections for the job security of our valued union workforce and also pension protections,” said Mayor Nutter. “But the transaction also provides for increased safety by enhanced investments in replacing miles of cast-iron pipes and for new business opportunities such as investing in PGW’s LNG facilities, which can help create an ‘energy hub’ that will produce more jobs in the city and region. This proposed transaction allows us to begin to address perhaps the most daunting financial challenge facing our City, namely our underfunded city pension fund.”
PGW is the nation’s largest municipally-owned gas utility, with annual revenues of more than $600 million, more than 500,000 residential, commercial and industrial customers and more than 1,600 employees. Read more about the sale process and submit questions or comments at www.exploringthesale.com.