Who should pay consultants hired to aid in PGW sale?

Just who should foot the bill for the team of legal, financial and communications consultants Mayor Nutter hired to aid in the sale of Philadelphia Gas Works was the topic of discussion at today's Philadelphia Gas Commission meeting.

The Commission – the body responsible for overseeing the management and operation of PGW - has delayed approving $2.7 million in expenses to pay the consultants.

Commission chair and Councilwoman Marian Tasco said there has been no delay, but that the Commission wanted to thoroughly review the process.

"This is what we're doing. No more, no less," Tasco said.

The administration argued that the Commission should approve the budget, expenses included.

"We ask only that PGW can fund the contract agreements," said Shelly Smith, City Solicitor. "We argue that the proposed budget is reasonable under any review of a sale. It's important for us to get to the point of evaluating whether a sale is prudent."

But an attorney for PGW's union and Community Legal Services (CLS) argued that the expenses are not a good use of rate-payer dollars.

Tasco questioned why the city couldn't cough up the funds for consultant fees.

"The advisors –they serve the (Nutter) administration and it alone. Common sense dictates the city should pay," said Robert Ballenger, public advocated and staff attorney for CLS. "The city wants full spending authority without authorizing it will need it."

James Runckel, attorney for PGW's union local 686 of the Utility's Worker Union of America said, "these costs are premature. We don't even know if it's a buyable bid."

The idea of selling PGW has been bounced around by previous mayoral administrations, but has faced roadblocks.

In 2010, the city entered into a $200,000 contract for the study examining the possibility of selling PGW, the nation's largest city-owned gas utility with more than 514,000 customers.  Lazard Freres & Co, the financial consultant determined the city could get up to $1.85 billion for PGW.

Many have expressed concern about how a possible sale would impact ratepayers. But today, Tasco says she has concerns about a potential conflict of interest raised by the union as it relates to Lazard's role in the sale of PGW.

The Commission can make a decision to approve or deny the budget request as early as January.