By Mike Dunn
PHILADELPHIA (CBS) -- Mayor Nutter today announced that he has reached a deal for a Connecticut company to buy the Philadelphia Gas Works for more than $1½ billion.
Nutter said it's high time for Philadelphia to get out of the natural gas business.
"There was a time when city ownership of a gas company made sense. I believe that time has now long passed," the mayor said this morning.
And with that, Nutter confirmed that New Haven-based UIL Holdings Corp. intends to purchase PGW for a whopping $1.86 billion.
Nutter said that was at the high end of the range of possible sale prices that financial experts had projected.
"It's a significant company up in the New England section," Nutter said of UIL. "They serve, between electric and gas, over 700,000 customers. They are well positioned financially -- a strong, stable company."
Under terms of the deal, UIL has committed to holding its base rate -- the portion of the bill unaffected by natural gas prices -- to current levels for three years. It will continue assistance programs for low-income customers. All current PGW employees will be guaranteed a job and their pension fund will be preserved.
Also, total employment at PGW cannot go below 1,350 people for at least three years. Currently, PGW employs about 1,600.
Mayor Nutter says the most important reason to sell PGW is to use the sale proceeds to shore up the larger and struggling pension fund of the city's own workers.
"This contribution would go a long way to restore the health of our city pension fund," he said. "When you look at the potential infusion -- that significant level of infusion into the pension fund -- the numbers ultimately actually work to our advantage."
Both Philadelphia City Council and the Pennsylvania Public Utility Commission must approve the sale. But getting the OK of City Council may be tough, as Councilwoman Marion Tasco -- a member of the Gas Commission that oversees PGW -- has already publicly said she is opposed.
James Torgerson, the CEO of UIL (at lectern in photo below), vows to work with councilmembers and ease their concerns.
"It should be a positive for the city," Torgerson said today, "and I think City Council needs to look at it, and make sure we are addressing all of the things they ask about. And I think in the end, we'll have a positive outcome."
A union representing some PGW workers has already said it opposes the sale and will lobby councilmembers to reject the deal.
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