Philadelphia Gas Works Sale Announced

Philadelphia Inquirer:

Mayor Nutter announced Monday that Connecticut energy company UIL Holdings Corp., has agreed to buy Philadelphia Gas Works for $1.86 billion.
The sale price is at the upper end of the range that the city's financial advisers last year estimated the utility would fetch. After paying off PGW's debts, Nutter said the sale would inject at least $424 million into the city's ailing pension fund....
He said UIL submitted the highest bid and agreed to contract terms that were important to the city: Keeping rates frozen for three years, maintaining PGW's discount programs for low-income families and seniors and preserving PGW employee and retiree pensions.
UIL, whose name surfaced publicly last week as the front-runner in the city's sale process, owns three natural gas utilities in New England and an electric company in New Haven. It would add PGW's 503,000 customers to a portfolio of 712,000 gas and electric customers.
UIL said it plans to operate dual corporate headquarters in Philadelphia and New Haven. PGW will become UIL's largest operating company.
The sale, if approved by City Council and the Pennsylvania Public Utility Commission, would end the city's 178-year ownership of PGW, the nation's largest municipally owned gas utility.
Council approval is far from certain. Nutter's relations with Council are frayed, and Council members have questioned why the city should sell one of its most valuable assets, which has been restored to stability in the last decade after a close call with financial ruin....
PGW's riverfront access and its underused Port Richmond plant that produces liquefied natural gas (LNG) for winter storage was pitched to potential buyers as one of PGW's most attractive assets.

I didn't realize that Philadelphia had a municipally-owned gas utility.  A little background:

PGW began providing gas service to the City of Philadelphia on February 10, 1836, when the city's first 46 gas lights were turned on along Second Street, between Vine and South Streets. In 1841, PGW came under city ownership and in 1897 UGI Corporation (then United Gas Improvement Company) was contracted by the city to operate and manage PGW. Similar contracts were effective until December 1972 at which time the City contracted with Philadelphia Facilities Management Corporation to operate and manage PGW.

Just like Cincinnati with the Cincinnati Southern Railway, a city is looking to sell a large city asset to help shore up their employee pension plan.  It sounds like while the gas works has been run fairly well in the past few years, the company is facing some significant infrastructure investments in the not-too-distant future:

Philadelphia's aging gas infrastructure needs significant investment, which could generate meaningful business for UIL Holdings, according to one report. Half of the city's gas pipes are of an older, cast iron vintage that are being replaced in other places, according to an analyst report from Wells Fargo.

It is a shame to see the cities considering selling valuable assets, although I don't know that being owned municipally leads itself to good business decisions, or to proper continuing investment in infrastructure.  It looks like the Philadelphia deal, if approved, will put off major changes for customers and employees for three years.  After that, I would anticipate major changes, mostly to the detriment of customers and employees.