Philadelphia’s city council indicated Monday that it would not sign off on the sale of a city-owned gas utility to Connecticut utility parent UIL Holdings.
Councilors said the $1.86 billion deal, first announced in March, would not provide enough financial benefit to Philadelphia and did not contain enough protections for customers.
Michael West, a spokesman for UIL, said Tuesday morning that the company was disappointed by the council’s statements and that there had not yet been public hearings on the deal.
“It was our understanding this would be a public process,” West said. “To not actually even have our day in court, if you will, was certainly disappointing and surprising.”
The council’s action, which goes against the wishes of Philadelphia Mayor Michael Nutter, comes in the wake of two reports in commissioned to evaluate the proposed deal with UIL — which would have created the parent of United Illuminating, Southern Connecticut Gas and Connecticut Natural Gas.
Nutter had wanted to use the proceeds of the deal to shore up the city’s pension system, according to Philly.com, which quoted Nutter as calling the council’s actions Monday at “the biggest cop-out in recent legislative history in Philadelphia.”
The reports by Concentric Energy Advisors found that the deal would be worth between $200 million and $400 million, not the $400 million and $600 million range the council said was advertised by the Nutter administration.
Councilors also expressed concerns about keeping rate increases at a reasonable level, and lack of promises regarding minimum employment levels and keeping a presence in Philadelphia beyond three years.
The council also said that UIL could foreclose on or sell liens on homeowners and businesses facing hardship, which is against PGW’s policies.
Indications that the deal might be in trouble came to light in July, when the council let pass a deadline beyond which it could pull out of talks.
West said UIL thought it had addressed councilors’ concerns and that the company hopes to reenter talks with the council.
