Phila. Gas Works Deal for $1.86B – Marcellus/Utica One of Keys

With an eye on its proximity to abundant and cheap natural gas from the Marcellus and Utica Shale, UIL Holdings Corporation, a Connecticut-based investor-owned gas and electric utility holding company, yesterday announced that it has reached an agreement to to buy Philadelphia Gas Works (PGW), currently owned by the City of Philadelphia, for $1.86 billion in cash. PGW is the nation’s largest municipally-owned natural gas utility. Last summer MDN told you that PGW was up for sale and that the Marcellus may well be the key to a sale (see Phila. Gas Works Goes on Auction Block – Marcellus Key in Sale?). Looks like our words ended up being prophetic, because UIL says the Marcellus/Utica is part of the reason why they want to buy PGW.

There had been talk that one PGW’s facilities could be turned into an LNG export terminal, but that idea seemed to be shot down later and hasn’t been mentioned since (see Consultant: Retooling PGW LNG Terminal for Exports Problematic). Still, this is a great day for PGW and its future. But the sale won’t happen without a fight. Even though UIL says they will honor labor union contracts already in place, the unions are staking out a position against the sale and intend to exert influence on Philadelphia City Council members who must approve such a sale. Here’s the announcement from UIL, and an update from the Philly Inquirer about opposition to the sale…

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