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.