Pressures applied to reconsider sale of PGW

Mayor Nutter and his allies are holding out hope to salvage the $1.86 billion Philadelphia Gas Works sale, and are applying enormous pressure on City Council to reconsider its surprise announcement on Monday that it was scuttling the deal without taking a vote.

Business lobbyists and a few labor leaders sympathetic to the privatization effort prodded Council members behind the scenes Thursday to support the sale of PGW to UIL Holdings Corp., a Connecticut utility operator.

But no Council members stepped forward Thursday to introduce legislation authorizing the sale. Instead, Council voted unanimously to set hearings, most likely in early December, to explore all options for the city-owned gas utility.

In the aftermath of the collapse, the Pennsylvania Public Utility Commission on Thursday said it would hold a session next month to hear PGW's plans for addressing its high rates, aging infrastructure, and low-income programs, which cost city gas customers $183 a year, three times the statewide average.

"We were holding off on discussing these issues while the sale process was going on, but now that it appears that it will not be taking place, we want answers on what's next," said Jennifer Kocher, PUC spokeswoman. The hearing would likely be in mid-November.

Council President Darrell L. Clarke on Thursday seemed unconcerned about the PUC's interest, saying state regulators had long pushed for the city to divest PGW. But some sale opponents privately expressed concern that state regulators could make life difficult for PGW - to punish the city for killing the sale.

Clarke said he had mostly heard praise about the decision to cut off further sale consideration.

Some of the most vocal sale opponents turned up at Thursday's meeting. Council members were greeted as they arrived at their caucus by about 25 members of the gas workers' union, which called out their names to cheers. The union has opposed any divestiture.

Nutter, in an interview, declined to discuss efforts to keep the deal alive. But he indicated he still had hope for his proposal, devised after a lengthy two-year process to solicit bids and negotiate the best deal.

"Personalities notwithstanding, hurt feelings and all that stuff, there is a serious, real transaction to be done here," he said. "With cooperation and flexibility and some give and take from all respective sides of this, we could do something really great."

The mayor and key advisers met Wednesday late into the night to craft a strategy. According to one sale advocate, the plan calls for lobbying Council's 17 members individually, hoping to persuade at least six to submit the bill to Council, compelling Clarke to hold hearings on the sale.

The Greater Philadelphia Chamber of Commerce on Thursday issued a gently worded call to "encourage" Council to allow a vote on the sale, which it called a "tremendous opportunity" to support ongoing city efforts to position itself as an international energy hub, connected to the Marcellus Shale natural gas boom.

Several labor leaders - John Dougherty of the Electrical Workers; Pat Gillespie of the Building Trades Council; and Ryan N. Boyer of the Laborers' District Council - tried to bridge the divide between Nutter and Clarke with a series of meetings Wednesday in the offices of City Councilman Bobby Henon.

The union leaders met separately with Clarke and Nutter, according to a source who was present. Chief among the discussions was whether there could be legislative solutions to concerns that Council members have about job security for PGW workers, continuation of discount programs for the poor and elderly, and UIL's long-term corporate presence in the city.

But Henon said he declined to introduce the sale legislation in deference to Clarke.

"I respect Council President Clarke's decision," he said. "We're not introducing the legislation because there is not an appetite on City Council with the asset purchase."

Council's sale opponents say they, too, support efforts to develop energy-related businesses in the region, though they say a municipally owned utility can play a role.

"We need to take advantage of this opportunity," Clarke said.

Councilwoman Marian B. Tasco, chairwoman of the Philadelphia Gas Commission, whose oversight functions would be eliminated if the city sold PGW, said Council members had not had "meaningful input" on the sale process.

She sponsored Thursday's resolution calling for an exploration of other options for PGW, saying a Council consultant, Concentric Energy Advisors, had identified up to $33 million in annual cost savings or new revenue for the utility.

"Now is the time for PGW to achieve its potential to go to the next level," she said.

The resolution said the utility could diversify its gas supply by tapping into the regional shale gas boom - the utility now buys its gas from Gulf Coast producers - and by expanding its capacity to liquefy gas for sale.

Union leaders were not won over by pension argument. A2.

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