- Associated Press - Monday, October 27, 2014

PHILADELPHIA (AP) - City Council members are effectively killing the proposed sale of Philadelphia’s gas utility to a Connecticut company, saying the risks of the deal outweighed the benefits to utility customers and the city.

Council president Darrell Clarke said there was “no appetite” for the proposed $1.86 billion sale of Philadelphia Gas Works to UIL Holdings Corp., which required approval from both the council and the state Public Utility Commission.

Mayor Michael Nutter said in March that the deal would inject $424 million into the city’s distressed pension fund, freezing rates for three years and maintaining discount programs for low-income families and seniors while safeguarding employee and retiree pensions.

But the council indicated in a statement Monday that members found those provisions and others inadequate and said loss of the utility’s annual $18 million payment would make the net financial benefit of the deal substantially less than the administration claimed. The statement, citing a consultant’s study, said household and business bills could be increased despite the commitment for a base rate freeze, and removal of municipal oversight would leave the city with no say on future rate increases.

Nutter called the council’s decision “the biggest cop-out we’ve seen in recent legislative history in Philadelphia.”

The Committee of 70, a Philadelphia government watchdog group, also criticized the action, saying killing the sale without a public hearing was “an affront to the taxpayers of Philadelphia.”

“Issuing a statement declaring that the risks outweigh the benefits, without allowing questions from the citizens they represent, is disgraceful and cowardly,” interim president Ellen Kaplan said in a statement.

The Utility Workers Union of America Local 686, which represents 1,150 PGW workers, opposed the plan, as did several environmental organizations that said it would mean higher gas bills and increased use of Marcellus Shale natural gas.

The union hailed the council’s decision, saying in a statement that the proposed sale “was never in the best interests of our citizens, especially the poor and elderly on fixed incomes.”

“PGW is a stable, profitable city asset and we are delighted that it will remain so,” the statement said.

PGW, which traces its history to 1836, is the nation’s largest municipally owned gas utility. It has more than half a million residential, commercial and industrial customers and more than 1,600 employees.

The council said hearings would be held in December on “how Philadelphia can leverage its considerable assets, including PGW, toward a future as a regional energy hub.”

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