DN Editorial: Gas decision leaks sense

CITY COUNCIL'S sudden-death dismissal of the proposal of UIL Holdings Corp. to buy PGW is the source of some pretty bad energy.

For one thing, Mayor Nutter blew a circuit, calling out Council for the "biggest cop-out we've seen in recent legislative history." We agree.

Council hired Concentric to analyze the terms of the sale, a proposal that was to provide $400 million to $600 million to help defray the city's staggering pension obligation. A separate report analyzed other "best and higher uses" of the utility. After months of delay and not a word about the progress, Council President Darrell Clarke delivered the reports yesterday and said the deal's off.

Not one hearing, not one public airing of the complicated and complex contents of the reports, and apparently not one thought for the public to have any say in the matter of selling a publicly owned utility.

The city has owned PGW for 176 years, and, until recently, the utility's fractious past has imperiled the city's stability and made the prospect of a sale laughable. New management helped turn around and stabilize the utility. The current state of the energy markets made a sale particularly timely, which was why the $1.86 billion sale price was so high.

The number of questions and contradictions in Council's analysis begs for full airing in public. To name just a few: Council didn't want the city to lose the $18 million that PGW pays the city each year. But during PGW's troubles, seven years went by with no payments.

Another big issue for Council was that UIL couldn't guarantee continuing low-income programs beyond the first three years. Currently, 100,000 low-income people and seniors get reduced rates from the utility; those rates are subsidized by the rest of the 500,000 customer base.

We are in support of those reduced rates. But the fact is that the rest of the ratepayers of PGW subsidize those rates with increases in their own bills. Why doesn't this give them more of a say in the future of such programs?

In addition to analyzing the sale of PGW, Concentric prepared a report that explored opportunities for "highest and best use" of PGW under city control.

Elements of this report also have us scratching our heads. For example, Concentric suggests that PGW is limiting its options by getting gas from primarily Gulf Coast suppliers and not from Marcellus Shale deposits being drilled right here in our own state. Legally, PGW is required to purchase the cheapest gas possible, and PGW has long-term contracts with gulf-state producers. But more disturbing, Council must have forgotten its own vote on a measure back in 2011 to halt Marcellus drilling until environmental studies were conducted. That was a Curtis Jones bill that began life as a measure that would have banned PGW from buying Marcellus gas.

Contradictions like this underscore questions about the motivations and the level of understanding that Council and other city officials have on the complexity of running a gas company - especially one that is still saddled with a $1 billion debt.

Oddly, we're more convinced than ever that the city has no business owning a gas company.

The Public Utilities Commission, which approves rates and regulates the utility, supported selling PGW. We doubt they'll be open to the next rate-hike request.

Council's actions on this were shortsighted, its methods undemocratic and its motivations for killing the sale seem murky at best.