PGW selling for $1.86 billion [roundup]

Philadelphia Gas Works, the largest municipally owned gas utility in the nation, is ever closer to privatization. Here’s a roundup of news related to this big possible sale:

The Sale:

• On Monday the city announced that UIL Holdings Corp would purchase Philadelphia Gas Works for $1.86 billion. After satisfying PGW’s debts the deal is expected to leave the city with at least $424 million which will go toward Philly’s pension fund. [Inquirer]
• UIL’s was the highest bid of 33 bidders and the Connecticut-based company agreed to freeze rates and layoffs for the first three years of ownership, keep discount programs for seniors and low-income households, and retain PGW pensions. [City of Philadelphia]
• The sale needs approval from the Public Utility Commission and City Council. But City Council has not been part of the four-year long process exploring PGW’s privatization, and Council President Darrell Clarke said they would not be rushed. Council has hired its own consultants to review the options after being kept largely in the dark during the bidding process. UIL can back out of the deal if City Council takes no action by July 15. [Inquirer]
• The Gas Workers Local 686 opposes the sale, fearing cuts are ahead. UIL’s stocks fell in response to news of the sale as analysts thought the company may have overpaid for PGW and would have to make deep cuts in order to remain profitable after the agreed upon three-year moratorium expires. [Daily News]
• After the three-year freeze on rate hikes gas bills are likely to spike, which is typical after utility privatization warns the advocacy group Food & Water Watch. [Business Journal] 
• PGW has a history of mismanagement that only recently improved. Was PGW badly managed because it was too political? Dave Davies considers the evidence of political patronage as well as PGW’s turnaround. [NewsWorks]

Marcellus Shale + PGW Sale:

• Should PGW become privatized it is likely to take advantage of Pennsylvania’s shale gas. Now Philly uses gas piped in from the Gulf of Mexico, despite Pennsylvania’s record growth in gas production, in part because PGW currently can’t collaborate with private companies on a new pipeline. UIL would be able to connect Philadelphia with the natural gas extraction in Pennsylvania’s Marcellus Shale region, which could also help UIL reposition PGW’s liquid natural gas (LNG) facilities on the waterfront. PGW uses these facilities for storage but UIL is thinking about expanding them to supply fuel for ships or trucks. [StateImpact PA]
• Michael Krancer, a former secretary of the Pennsylvania Department of Environmental Protection, predicts that Philadelphia will become the “Silicon Valley of energy” if it gets the PGW sale right. Pennsylvania now ranks third in natural gas production – behind only Texas and Louisiana – creating opportunities for Philadelphia to be a hub for shale gas. Krancer also sees the potential for PGW’s LNG facilities as part of energy supply networks under private ownership – particularly given the explosive growth in shale gas production in the state – which could mean more jobs. [Forbes]