Op-ed: On PGW, look beyond UIL’s promises

Prom­ises, prom­ises …

In its bid to buy the Phil­adelphia Gas Works, the Con­necti­c­ut-based UIL Hold­ings Inc. keeps prom­ising that Phil­adelphia will love UIL once we’ve had the op­por­tun­ity to ex­am­ine its pro­pos­al.

But UIL’s pub­lic prom­ises stand in stark con­trast to the things it says in private, when the pub­lic’s not pay­ing at­ten­tion. Those state­ments make clear that UIL’s bid for PGW is a bad deal - bad for work­ers, bad for cus­tom­ers and bad for the city.

Con­sider the fol­low­ing:

While pub­licly prom­ising to pro­tect jobs at PGW, UIL can ac­tu­ally cut the cur­rent PGW work­force by 300 jobs over the next three years. In a re­cent call with Wall Street ana­lysts, UIL ex­ec­ut­ives agreed that it would ul­ti­mately cut PGW’s work­force by 20 per­cent, and that it ex­pects this re­duc­tion soon­er rather than later, after the sale. UIL also noted that there is no pro­tec­tion against lay­offs after that three-year peri­od.

UIL has claimed PGW’s work­ers’ pen­sions are pro­tec­ted. The truth is that the PGW pen­sion is to be frozen, and UIL is not re­quired to provide any re­tire­ment be­ne­fit to work­ers after May 15, 2015. As a res­ult, a 28-year PGW work­er will have his pen­sion re­duced by 36 per­cent, and a 20-year work­er will have his pen­sion cut by about 53 per­cent, un­less UIL agrees to con­tin­ue the pen­sion go­ing for­ward. It does not of­fer a pen­sion to work­ers hired after April 1, 2005.

The UIL deal for PGW is struc­tured to make the sale price as high as pos­sible, and here’s why: the high­er the price, the fat­ter the fee paid to the Wall Street brokers who put the deal to­geth­er for the city. Based on the sale price, the brokers stand to make al­most $13 mil­lion on the deal, all on the backs of work­ers and the poor.

UIL talks about po­s­i­tion­ing Phil­adelphia as an en­ergy cen­ter, yet it has re­fused to share its eco­nom­ic de­vel­op­ment plan for the city. UIL is one of the few en­ergy util­it­ies in Amer­ica with a cred­it rat­ing that’s ac­tu­ally worse than PGW’s cur­rent rat­ing, so UIL’s cost of cap­it­al will be sig­ni­fic­antly high­er, and PGW cus­tom­ers will foot the bill.

UIL pub­licly prom­ises rate pro­tec­tion, yet the deal carves out huge loop­holes for stag­ger­ing new rate in­creases to cov­er the cor­por­ate taxes UIL must pay as a for-profit com­pany. UIL made sim­il­ar prom­ises on rates when it bought Con­necti­c­ut Nat­ur­al Gas in 2010, yet the Con­necti­c­ut Of­fice of Con­sumer Coun­sel, in ar­guing against UIL’s pro­posed rate hike fol­low­ing the pur­chase, called UIL’s rate re­quests “over­stated and ex­cess­ive.”

For more than a dec­ade, PGW and its work­ers to­geth­er have re­formed the util­ity’s op­er­a­tions, saved money and im­proved ser­vice for cus­tom­ers. We have long re­cog­nized that our loc­al uni­on has a stake in the fu­ture of the com­pany, and we con­tin­ue to sup­port any plan that grows in­vest­ment, jobs and op­por­tun­ity for Phil­adelphia.

We are cer­tain that there are bet­ter op­tions for PGW’s fu­ture, op­tions that can make PGW and the city of Phil­adelphia a ma­jor en­ergy cen­ter for the mid-At­lantic re­gion and bey­ond. Util­ity Work­ers Uni­on of Amer­ica Loc­al 686 stands ready to par­ti­cip­ate as a will­ing part­ner in this ef­fort, and we ap­plaud City Coun­cil’s care­ful de­lib­er­a­tion and de­cision to ex­am­ine oth­er al­tern­at­ives to a sale of PGW. ••

Keith Homes is Pres­id­ent of the Gas Work­ers Uni­on Loc­al 686.

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