4 years after failed sale, PGW proposes public-private deal that could bring in $5M a year

Four years after a deal to sell Philadelphia Gas Works was torpedoed by City Council, which sought to better leverage its existing assets rather than sell them off, the municipally owned utility is proposing a public-private partnership that could fit right in line with what council members had in mind. PGW filed a proposal with the Philadelphia Gas Commission on Thursday seeking approval of a deal that would allow a private company to finance and build a liquefaction facility and truck loading facility around PGW’s existing natural gas storage plant in South Philadelphia. It’s a deal that comes at no cost to the utility but could bring in more than than $5 million a year in revenue, PGW spokesman Barry O’Sullivan told the Philadelphia Business Journal. The details of the proposal are somewhat complex, so here’s a quick breakdown: PGW is working with Liberty Energy Trust, Permit Capital Advisors and Northstar Industries in a new partnership named P3 Partners. PGW will license out a parcel of land at its Passyunk Plant to a newly formed entity called the Passyunk Energy Center (PEC), which Liberty Energy Trust will create, to build the new liquefaction and truck loading facilities. PEC will finance the construction of the liquefaction and truck loading facilities, which will be built around PGW’s existing natural gas storage tank, and PGW management will work with PEC on the design.  It will cover 2 acres of the 60-acre plant and be built by Northstar. PGW will then lease the new equipment from PEC to operate it, using its equipment, expertise and staff, for a minimal fee — $10 a year. PEC will pay PGW about $1.3 million to $1.5 million in fees to do so. PEC will then handle all aspects of selling the LNG and will split revenues 50/50 with PGW, which is expected to bring in about $4 million annually.   Source: Bizjournals