City Council Study of PGW Sale to Cost Nearly $100K More Than Expected
On the eve of a deadline that would allow Connecticut-based UIL Holdingsto back out of an agreement to purchase PGW for $1.86 billion, the Inquirer reports that the studies commissioned by City Council to evaluate the deal will end up costing $522,750. That’s nearly $100,000 more than the $425,000 Council had previously announced it was going to be paying Concentric Energy Advisors. The reason? Council modified its original RFP:
Concentric, a highly regarded energy consultant, is conducting two studies for Council. One is assessing the Nutter administration’s proposed $1.86 billion sale of PGW to UIL Holdings Corp. of New Haven, Conn. A second is examining whether there are better alternatives for the city than selling the 176-year-old utility.
Council asked Concentric to expand its study to evaluate PGW’s options for extracting greater value from the utility’s liquefied-natural-gas facility in Port Richmond. Concentric also was asked to examine whether PGW could leverage its proximity to cheap Marcellus Shale natural gas to promote economic development.
Neither assignment was included when Council in December asked prospective consultants to respond to a request for proposals.
Despite repeated urgings from Committee of Seventy, Council declined to act on the sale before recess. According to the Inquirer, while UIL can bail on the deal if a settlement is not reached tonight, it seems unlikely that the company would forfeit some $6.9 million it’s already sunk into costs related to the acquisition.
Kirk Dorn, a spokesman for the city’s PGW sales effort, told the Inquirer in a tone that reads almost impossibly diplomatically: “This is a very important and tremendously beneficial transaction for the city, and it’s Council’s prerogative to invest what it feels is necessary to have its questions answered.”