PHILADELPHIA-UIL Holdings Corp., a Connecticut-based gas and electric utility holding company, will purchase Philadelphia Gas Works for $1.86 billion.

Philadelphia Mayor Michael Nutter announced the deal for the city-owned utility that was founded in 1836. PGW manages a distribution system of approximately 6,000 miles of gains mains and service pipes that supply about 500,000 customers in the city.

The sales price is at the upper range of what city financial advisors had estimated last year, according to The Inquirer. Mayor Nutter estimates the sale will infuse at least $424 million into its pension fund. UIL was the highest bidder and agreed to key contract terms, city officials said.

"When I announced nearly two years ago that the city would begin exploring the sale of PGW, I pledged that I would sign an agreement only if the terms benefited Philadelphia taxpayers and PGW customers," Mayor Nutter said. "This agreement accomplishes those goals and much more."

“PGW Operations is an excellent operational and strategic fit for our company and a natural addition to our portfolio of fully regulated utilities,” said James P. Torgerson, president and CEO of UIL Holdings Corp. “We are committed to investing in PGW Operations to enhance its ability to deliver cost efficient, safe and reliable natural gas and high quality service to customers. Over time, and working with PGW Operations' strong workforce, we will upgrade PGW Operations' infrastructure, expand services and increase capital investments to drive growth.” See story in The Inquirer.