Controller: PGW Sale Could Result in Net Loss

Says can't pin down cost of paying off workers' pension funds.

The Inquirer reports this morning that City Controller Alan Butkovitz  is casting doubt on the city’s proposed sale of Philadelphia Gas Works to a private company, saying he can’t be sure the city will make a profit off the sale.

The problem, he says, is that he can’t determine how much of the sale money will be needed to bring the gas workers’ pension fund into full balance. He estimates more than $300 million would be needed; aides to Mayor Nutter say the true cost is closer to $274 million.

“Suppose it comes back that the gas workers’ pension fund would eat up all of the profit and more, so that we actually sell it at a loss,” Butkovitz said. “That would be an important development.”

Rob Dubow, the city’s finance director, said Tuesday that Butkovitz’s projections were misinformed. “We need to sit down and talk with him,” Dubow said.

The administration estimates the proposed PGW sale to UIL Holdings Corp. will net the city $420 million to $631 million after all obligations are paid off. UIL’s offer came in at the top of the range that financial advisers estimated the utility would fetch.

UIL, the Connecticut company trying to buy the utility, can walk away if the City Council doesn’t approve the sale by July 15.