Would-be buyer of PGW reaches out to its workers

On the eve of a contentious City Council debate about the sale of the Philadelphia Gas Works, the utility's prospective buyer reached out directly to PGW employees on Wednesday to reassure a worried workforce about its benefits package.

"Much has been said and written about the proposed sale, and I thought this would be a good time to clarify compensation and benefits," James P. Torgerson, chief executive of UIL Holdings Corp. of Connecticut, wrote to PGW's 1,650 employees.

Torgerson's letter outlines benefits it would maintain for non-union PGW employees if its $1.86 billion purchase goes through. He said UIL was prepared to offer the same benefits to unionized workers.

UIL's outreach did not endear itself to leaders of Gas Workers Local 686. James F. Runckel, the union's lawyer, said the letter's promises were meaningless and unenforceable.

"You can make a paper airplane out of it," he said. "It doesn't mean anything."

UIL's letter appears to be aimed primarily at about 385 PGW managers and union employees who are eligible for retirement at the end of the year to assure them that their benefits would remain intact. PGW officials are concerned the sale will trigger an exodus of senior staff.

But the letter also seems to have a broader intended audience - members of City Council who are under pressure from PGW's union to reject the sale, which Mayor Nutter announced March 3.

Michael A. West Jr., UIL's spokesman, said the letter was aimed to counter "misinformation" about the sale terms.

"We need employees to understand what our commitment is," he said. "We're a serious company. We're good operators."

Council has delayed holding hearings and a vote on the sale until its consultants can weigh in. It hired Concentric Energy Advisors of Massachusetts in March to produce two reports: one examining the sale and one exploring alternatives to selling the 176-year-old utility.

Drafts of the Concentric reports have been undergoing a review by Council staff members and will be presented to Council before hearings are conducted.

UIL promised no layoffs and vowed to retain at least 1,350 employees for the first three years and pledged not to raise rates until 2018. City officials said UIL's workforce-retention promises were the strongest of any prospective bidders.

Wednesday's letter spells out other specifics. UIL said there would be no change in policy on unused sick leave and vacation time, pension plan benefits for existing employees would stay the same, and life insurance benefits would not change. UIL said it would replace PGW's current deferred compensation plan with an equivalent 401(k) benefit.

UIL said it would in 2016 begin phasing in medical benefits cost-sharing for active employees and future retirees. But employees eligible to retire at the end of 2014 would retain their current medical plans "no matter when you choose to retire," it said.

Nutter in 2012 proposed selling PGW to divest the city of an asset that has recovered after several close brushes with financial catastrophe. PGW suspended its annual $18 million payment to the city for seven years, and was forced to seek an emergency rate increase in 2008 after the economy crashed.

The sale would net the city $420 million to $631 million after all PGW pension and debt obligations are paid off. Nutter wants to apply the proceeds to the city's underfunded pension plan.

The sale requires approval from City Council and the Pennsylvania Public Utility Commission.

Source: Philly.com