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Workers Worry About UGI: Pensions, Benefits Concern Employees

Posted on: Thursday, 18 May 2006, 12:04 CDT

By Jerry Lynott, Wilkes-Barre, Pa., Times Leader

May 18--WILKES-BARRE -- Past and present employees of PG Energy Inc. voiced concerns about the future of their pensions and retirement benefits at a public hearing Wednesday on the sale of the natural gas utility to UGI Corp.

A few of them left wondering whether they could count on receiving the benefits after the sale, despite reassurance from an officer of Southern Union Co., the Houston-based owner of the utility, that the company has $50 million set aside in a trust for the pensions and has the "economic wherewithal" to secure capital to meet its obligations.

Southern Union is selling its local distribution company PG Energy to UGI for $580 million, but will retain control of the retirement benefits under the terms of the sale agreement. The deal, pending approval by the Pennsylvania Public Utility Commission, is expected to close by Sept. 30. UGI will offer jobs to PG Energy's nearly 400 employees and create a new subsidiary to service PG Energy's 158,000 customers in a 13-county area.

Once the sale is approved, Southern Union will have no further connection to the region or state and will not be subject to PUC review. The promise of an out-of-state corporation controlling retiree benefits unnerved some of the witnesses who testified at the first of two hearings at King's College.

"What guarantees are there retirees will receive pensions?" asked Dean Cassidy, a retiree of the former Pennsylvania Gas and Water Co., which provided natural gas service in Northeastern Pennsylvania before PG Energy.

He also told administrative law judge Susan Colwell that there is great concern among retirees that they will lose their life insurance and medical benefits as well if the sale is approved.

Three current utility employees and another retiree followed Cassidy.

Rick Warner of Blakely, a supervisor with 33 years on the job, said the pensions and benefit obligations should be transferred to UGI under the sale terms. "If it cannot be done, then please deny the request," he told the judge.

Colwell will consider testimony from the witnesses when making her recommendation to the PUC sometime later this summer.

Richard Marshall, vice president and treasurer of Southern Union, addressed the audience of approximately 50 people and answered several questions about the post retirement benefits and pension.

As for the pension, the company has every intention "to meet the obligations going forward," Marshall said.

When asked about the life insurance and medical benefits, he said the company makes decisions on an annual basis.

Pressed even further by attorney Joseph Vullo why the benefits and pensions will remain under the control of Southern Union and not UGI, attorney Thomas Sniscak representing Southern Union objected. Vullo was representing the Commission on Economic Opportunity, which has intervened in the case to ensure low-income programs and conservations measures are continued under the new ownership.

Sniscak said Marshall was not present to give a sworn statement. The attorney advised anyone seeking an answer on the matter to put it in writing and submit it to the judge.

When state Rep. Phyllis Mundy, D-Kingston, again raised the question, Colwell told her, "I doubt you'll get an answer here. I guarantee you'll get one from the commission."

Jerry Lynott, a Times Leader staff writer, may be reached at 829-7237.

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Copyright (c) 2006, Wilkes-Barre, Pa., Times Leader

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NYSE:UGI, NYSE:SUG,

Source: The Times Leader (Wilkes-Barre, Pa.)

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