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PHILADELPHIA (AP) - The mayor on Monday announced an agreement to sell the city-owned gas utility to UIL Holdings Corp. for $1.86 billion and using some of the proceeds to prop up its distressed pension fund.
Mayor Michael Nutter said the deal, which requires the approval of City Council and state utility regulators, would inject at least $424 million into the city's pension fund, which is now less than 50 percent funded.
Philadelphia Gas Works, which traces its history to 1836, is the nation's largest municipally owned gas utility with more than 500,000 residential, commercial and industrial customers and more than 1,600 employees. New Haven, Conn.-based UIL serves about 706,000 electric and natural gas customers in Connecticut and Massachusetts.
Nutter said the agreement would keep rates frozen for three years and maintain discount programs for low-income families and seniors as well as safeguard employee and retiree pensions. He said it also "positions PGW to take full advantage of the abundant supply of natural gas in Pennsylvania to make our city and region a prime energy hub."
Nutter's administration chose UIL from 33 entities that expressed interest in acquiring the utility. The contract requires that all PGW employees be offered employment at UIL, with total employment not to dip below 1,350 employees for at least three years, officials said.
The Utility Workers Union of America Local 686, which represents 1,150 PGW workers whose contract expires in 2015, is against a sale. A notice on the organization's Facebook page urges members to attend a council meeting Thursday to show opposition. Union activists have recently been circling City Hall in a truck urging Nutter to reject a sale.
Several other organizations immediately announced plans to fight the sale, saying it would increase gas bills and could lead to a natural gas export facility in the city.
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