Labor mostly backs Council's rejection of PGW sale

Anybody within earshot of City Hall knows where the Philadelphia Gas Works' union stands on Mayor Nutter's proposed sale of the utility to a private company.

"PGW is a valuable city asset," blares a message from the union's sound truck on its weekly circumnavigations of City Hall. "So why on earth is Mike Nutter selling it? Say 'No!' to the sale of PGW!"

The region's labor unions, for the most part, have fallen in line behind Gas Works Employees Union Local 686, which represents 1,150 municipal gas workers. Last week, they applauded when Council President Darrell L. Clarke blocked a vote on Nutter's proposal to sell PGW to a Connecticut energy company. Without Council approval, the $1.86 billion deal is dead.

"The labor position, as far as I'm concerned, is in support of the gas workers and not selling the gas works, especially under the current conditions," said Patrick J. Eiding, president of the Philadelphia Council AFL-CIO, the umbrella for about 100 union locals.

Behind the scenes, that image of a unified labor front is a little more murky.

The city has pressed leaders of unions that would benefit from jobs created by a sale to UIL Holdings Corp. to come out in support.

Last week, several labor leaders - John Dougherty of the Electrical Workers, Pat Gillespie of the Building Trades Council, and Ryan N. Boyer of the Laborers' District Council - tried to bridge the divide between Nutter and Clarke, to no avail.

Boyer made the most public expression of support, in an Inquirer opinion piece Oct. 15 that argued that a private buyer had more money to invest in badly needed gas-main repairs. Though his article did not mention it, Laborers could get more work if there were an upsurge in gas-main replacements.

"Selling PGW is not only a chance for Philadelphia to begin restoring government's role as a partner in ensuring safety," Boyer said in the article. "It is also the only way to protect residents from this growing and often deadly problem."

Boyer's breaking of ranks irked some of his colleagues. "Brother Boyer's op-ed was pretty much based on safety issues," Eiding said. "I can't say why he feels that way."

Boyer did not respond to requests for comment.

Dougherty, the powerful electricians' union chief, also did not respond to interview requests.

Gillespie said he supports the sale on the condition that the gas workers and UIL reach some accommodation on the union's contract, which expires in May. UIL has promised under the sale terms not to lay off workers for three years, but the company says it cannot negotiate other key demands it seeks - the biggest are dramatic reductions to pensions and health-care plans - with people who are not currently its employees.

"If they had gotten together, that would have cleared the field for us to go in and lobby on behalf of the deal," Gillespie said.

He subscribes to the view that the sale of PGW would accelerate the build-out of a regional energy hub - an influx of private investment into energy-related activities tied to the booming Marcellus Shale natural gas fields. PGW, as a municipal nonprofit with limited funds, is unable to enter into profit-making deals or ventures outside Philadelphia.

After Council decided summarily to block any public hearings on the sale, Gillespie came off the sidelines, somewhat.

"Apparently people on City Council, they just don't understand the business of energy and the opportunities that this type of deal presents to all of us," he said.

James F. Runckel, the Spear Wilderman lawyer who has represented PGW's union for 27 years, characterizes the defections of a few labor leaders as insignificant.

He pointed to a stream of letters to City Council, starting with AFL-CIO president Richard Trumka, expressing opposition to the sale.

One group that was under pressure to break ranks was municipal workers, whose underfunded pension plan would get a huge boost from the net proceeds of the sale.

Pete Matthews, president of AFSCME District Council 33, did chime in on the sale in a March letter to Council President Clarke, opposing the privatization of any city workers.

"While Mayor Nutter seems to believe that District Council 33 and city workers should support this sale because some portion of the sale proceeds might be utilized to make belated infusions of cash to the city pension fund, we do not support privatizing city jobs, or reducing or eliminating the pension of other city workers, which would occur if this sale proceeds," Matthews wrote.

Runckel said any chances of labor harmony were diminished from the beginning because the union was not consulted about the sale process.

"The idea was even if it were sold over the objections of our workers, there would be protections there for our workers," Runckel said. "There aren't."

After the UIL agreement was announced March 3, relations only got worse.

The sale agreement provides that PGW's pension plan and post-retirement benefits be fully funded. But UIL made it clear that it wants to end the pension plan for any new hires, and impose health-care copayments of 20 percent where PGW workers are now fully covered. Those terms are consistent with the benefits it provides workers at its four New England utilities.

UIL committed itself to no layoffs for the first three years after the sale, and not to let employment levels slip below 1,350. PGW currently has more than 1,600 workers.

"Beyond that, there is no requirement in the agreement," UIL president and chief executive officer James P. Torgerson told investors on the day the sale was announced.

UIL agreed to honor the terms of the existing labor contract, but it expires next May, shortly after the transaction is scheduled to close. The city and UIL have declined to negotiate a new deal until after the sale is completed.

Runckel said there is little UIL can do now to make matters better.

"I don't think that it's really possible at this stage, or really was possible at any stage," he said. "The union didn't hide its demands."

215-854-2947 @maykuth