City Council opposed sale of publicly owned utility
NEW HAVEN — UIL Holdings Corp. announced November 10 that it would not terminate its planned $1.86 billion purchase of Philadelphia Gas Works at this time. In its announcement the parent of the United Illuminating Co. and Southern Connecticut Gas Co. expressed “disappointment” that the City Council of the Pennsylvania city opposed the sale of the publicly owned gas utility in an October meeting.
UIL “will continue to monitor developments in Philadelphia to assess the advisability of further delaying termination of the agreement.”
Philadelphia Mayor Michael Nutter had hailed the planned sale to UIL as a win for the roughly 500,000 ratepayers, the municipal pension fund, and efforts to boost the region’s energy sector.
The council said an outside consultant it hired found that the city would net $200 million to $400 million, far less than the $400 million to $600 million cited by Nutter’s administration. Council officials noted other concerns, including the lack of a guarantee that rates would stay “reasonably affordable” after a promised three-year rate freeze.
“On October 28 we expressed our disappointment in the City Council’s announcement that it would not endorse the sale, and stated that we would determine whether to exercise our contractual right to terminate the agreement and make a determination on future action within two weeks,” said James P. Torgerson, UIL’s president and chief executive officer, in a statement.
“The transaction made strategic sense for UIL when we announced the agreement in March of this year, and continues to make strategic sense today,” he added. “Accordingly, with time remaining for the City Council to consider the transaction at its upcoming meetings, we believe that it would be premature to exercise our right to terminate at this time.”
UIL said it has had the contractual right to end the deal since July 16. The company said that if the Philadelphia City Council doesn’t adopt an ordinance approving the deal by December 31, the asset-purchase agreement will automatically terminate.