Killing PGW Deal Bad for Philly

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City Council has announced that they are killing the proposed sale of PGW without holding a hearing and without taking a vote. The city is not selling PGW? This is the stupidest thing that City Council has done in recent years. Their doing it without hearings or votes is particularly spineless.

The city should not be in the business of selling gas. Period. There is a reason that few municipalities own gas utilities across the country. In addition to owning these unneeded capital assets, we have a ready need for the money that the sale would generate. Our ridiculously underfunded pension plans would have been recipients of the money. These are long-term commitments that we have an obligation to meet.

Significantly, the bond rating agencies took negative rating actions on the bonds of UIL Holdings, Inc., the acquiring company. This tells me that they think that UIL Holdings had agreed to pay too high a price for the utility. Doesn’t that scream out "Take the money and run!"

Perhaps the most important reason for selling PGW is it’s poor track record for maintaining its pipelines and distribution system. Did you read the article in Sunday’s Inquirer entitled "Avoiding a Disaster?" You should. PGW’s gas distribution system is one of the worst maintained in the country. Nearly two-thirds of the mains are "at risk." "At risk" is a big deal, because people can die when there is a leak. Raise you hand if you think that the city is going to invest the money to solve this problem in a swift manner. I didn’t think I’d see any hands.

One fact that the article in Sunday’s Inquirer did not talk about is the Municipal Tort Claims Act. This state law limits the city’s liability in any accident to $500,000.00. This means that if ten houses blow up and thirty people die, the owners of the homes and the families of the dead will split the $500,000.00 among them. I’m not making that up. In another life I was a Deputy Attorney General and handled these types of cases. This is a financial incentive for the city to NOT replace the gas mains quickly. About three years ago a gas main explosion in Allentown destroyed eight homes and killed five people. It cost UGI, the private utility provider, about $25 Million. The same accident in Philadelphia would have cost the city fifty times less. It would still, however, cost the homeowners and families of the dead and injured the same.

I will grant that the present management of PGW is competent. This is the first time in my memory, however, that it has been well managed. For most of my lifetime it has been a cesspool of corruption and mismanagement. Reflecting the cesspool of corruption and mismanagement that characterizes the city government for most of that time.

This is being shot down primarily because City Council members are afraid that a small union will hurt their individual chances for reelection. Come on. There is not a gas utility in America that is not unionized. In fact, UIL Holdings’ employees are represented by the same union that represents PGW’s unionized employees. Anyone who looks as PGW’s workforce will admit that it is bloated. That’s a reason our gas bills are higher. And a reason why there is less business development and fewer jobs in Philly. Sure, UIL Holdings us going to shrink the workforce, but the way this has been done in other utility mergers has been through attrition.

The bottom line is that this is bad for Philadelphia. And predictable. Our present City Council cares nothing about you and only about themselves and getting reelected. This won’t come to a vote, so ask each member what their position on this issue was next year when they are running for reelection. You know how I feel.

Commentary by Matt Wolfe, Republican candidate for City Council at Large. Check out his website at