ELEPHANT CORNER: Clarke Is Wrong – Selling PGW Is Right

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PGWThis week City COUNCIL PRESIDENT DARRELL CLARKE did two things I expected him to do. He announced a special election will be held at the May primary for the recently vacated City Council-at-Large seat of BILL GREEN, who left to become the Chairman of the School Reform Commission. He also threw water on the deal the City reached with UIL Corp. for the purchase of the City’s gas-distribution assets doing business as the Philadelphia Gas Works.

While I do not usually praise the Mayor, I do believe the PGW deal is about as good as gets. The sale price of $1.86 billion is on the high side of what City’s financial advisors, Lazard Frères, expected. After the use of UIL’s cash payment to defease the PGW-related debt (and other liabilities), Philadelphia will net between $424 and $631 million which can be contributed to the City’s woefully underfunded pension plan.

Clarke stated he was skeptical about selling PGW as he believes the City could use the PGW as a platform to take advantage of the Marcellus Shale boom. This is from the man who not only wanted to ban drilling for natural gas near the Delaware River but also wanted to prohibit PGW from buying Marcellus Shale gas. The thought that our city officials, including the members of City Council, would have the discipline to put their political ambitions in check to allow industry experts in their employee to do the work necessary to make Philadelphia a true energy hub is laughable.

The buyer, UIL, a Connecticut-based utility, agreed to keep a headquarter office in Philadelphia, as well as not to seek a base rate increase for three years and to keep the current special rates for low income and elderly customers. The buyer also promised not to lay anyone off for three years, not to allow the current work force of 1,650 to drop below 1,350 during that time, and to set up a pension plan that mirrors the one the workers currently have with the city.

This, of course, did not satisfy FRANK KEEL, a spokesman for the Utility Workers of America Local 686, who said UIL could not possibly keep all of the promises they have made. Yes, eventually there will be workforce reductions at the PGW. There probably should be. Peoples Gas, which serves Chicago, is roughly 40% larger than PGW in terms of both net assets and customers, but has approximately one-third fewer employees.

That being said, UIL’s plans to greatly accelerate the replacement of aged cast-iron mains will create jobs that will need the skills similar to those of PGW gas-main repair workers. This was not lost on Electrical Union Local 98 BUSINESS MGR. JOHN DOUGHERTY, who appears to be supportive of the UIL purchase of PGW.

A private-sector company such as UIL is better poised to finance an accelerated main-replacement program. PGW’s current replacement schedule would take it roughly 50 years to remove the aged pipes. That is not in the interest of the people of Philadelphia. The gas explosion in Ewing, N.J. yesterday, which killed a woman, injured seven utility workers and damaged 55 homes, highlights why we want PGW in private hands. According to Pennsylvania law, PGW can only be held liable for $500,000 per incident. If the Ewing accident occurred here, all of those people would share in the $500,000, however, a private owner would be held responsible for all the losses.

COUNCILMAN AT LARGE DAVID OH continues to push forward in his fight to make Philadelphia more global. He recently toured a bakery in Northeast Philadelphia helping to arrange export channels for 100,000 locally made cheesecakes per month to be shipped to Korea. He says more exports of Philadelphia-made products will create jobs and enhance the brand of the city throughout the world.

The Republican and Democratic candidates for the special election will be selected by each party’s ward leaders. I expect to Democrats to select STATE REP. ED NEILSON of the 169th Dist., whose seat has been redistricted to York Co. Republican WARD LEADER MATT WOLFE has announced his intent to run. While I hope the Republican wins, I take solace in that Neilson is close to John Dougherty and thus may become a vote for the sale of PGW to UIL.

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One Response to ELEPHANT CORNER: Clarke Is Wrong – Selling PGW Is Right

  1. The elephants should know that Councilman David Oh can be a key vote in getting that PGW sale done. He obviously is pro-biz and big on international deals. Let’s back him up on this.


    March 10, 2014 at 2:07 pm

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