City Council won’t give an inch when it comes to PGW
Philadelphia’s City Council said "no" to the proposal of privatize PGW, and although the council has received strong criticism for making the decision behind closed doors, it seems they made up their minds for real.
City Council president Darrell Clarke announced last Monday that the financial and public policy risks associated with the sale proposal outweighed the stated benefits to the city and PGW customers.
In March, Philadelphia Mayor Michael Nutter announced that the gas company already had a buyer: UIL Holdings, located in New Haven (CT), would acquire the company for $1,86 billion.
Nutter said that the proposal would provide $424 million in funding for city pensions while at the same time, cementing a three year rate freeze for consumers, and the continuation of discount programs for low-income seniors.
According to the council’s report, however, the permanent loss of PGW’s annual $18 million payment to the city would substantially drop the net benefit of the proposed transaction — a reduction that would put it in the $200-$400 million range, rather than $400-$600 million as stated by Nutter.
The report also cited a lack of commitment to keep rate and bill increases at reasonably affordable levels beyond the initial three years. They also cited the lack of commitment on maintaining employee wages and benefits beyond the expiration date of the current Collective Bargaining Agreement (CBA) on May 15, 2015 and the lack of commitment by UIL to maintain a local presence beyond its guarantee to keep PGW headquarters in Philadelphia for three years.
From the beginning, members of the Utility Workers Union of America Local 686, as well as environmental organizations, opposed the plan to sell PGW, arguing that it would mean higher gas bills and increased reliance on Marcellus Shale natural gas.
A few days after the council’s announcement, Nutter published an opinion piece on the Inquirer under the title “Council, do your job on PGW.”
“The only way that we'll get to the truth about this proposed historic sale is for Council to introduce the bill, schedule hearings, give everyone a chance to be heard, and then let Council members do what they're paid to do — explain where they stand, make choices, and then vote,” wrote the mayor.
However, Councilwoman Marian Tasco’s statement during the last council session was in essence an agreement to disagree.
“We promised our constituents we would do our due diligence on this matter, and we did,” Tasco said. “Our independent consultants, concentric energy advisors, made a careful review of the business terms of the proposed agreement of sale, and worked hard to answer the questions asked by council members along the way.”
According to the Inquirer, however, Council members said they had not received a copy of the report until the Monday in which Clarke announced the decision.
The Committee of Seventy was one of the first to call city council’s decision “stonewalling on PGW proposal and ‘reprehensible.’”
“There is no credible explanation for Council’s refusal to even introduce the PGW proposal,” said Ellen Kaplan, Seventy’s Interim President and CEO. “They have had months to examine the proposal and have had their own taxpayer-funded consultant’s report for weeks. Philadelphians deserve to hear all the facts, including the consultant’s analysis.”
Tasco introduced a resolution to hold hearings to discuss Philly as a future energy hub, which was approved unanimously. No schedule for a hearing has been announced.