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Attorney General: Pump the brakes on Peoples pipeline project

20150331_Peoples_fbIn light of ballooning costs and allegations of mismanagement, Attorney General Madigan is asking Peoples Gas to back down from a pledge to complete its massive pipeline replacement project by 2030.

In a brief filed March 27 with the Illinois Commerce Commission (ICC), Madigan said that Peoples’ project has fallen seriously behind schedule and that the company has not even come close to a pace that would achieve completion by 2030.

According to Crain’s Chicago Business, Peoples says it has installed 570 miles of new pipeline in the last four years, at a pace of 143 miles per year.  To complete the project by 2030, it would have to amp that up to 200 miles per year.

In the meantime, Peoples Gas keeps winning rate hikes to pay for the project ($58 million in 2012, $56 million in 2013 and $75 million in early 2015).  Overall reported costs for the program have doubled to $4.6 billion over the past five years, which could cause consumer rates to double over the next decade.

“The record is clear that if Peoples Gas were to now follow through on a goal of completing the (program) by 2030,” the brief said, “the effect on residential customer rates would be large and financially burdensome for Chicago residents.”

The request by the attorney general’s office is the latest in a series of headlines about Peoples’ expensive pipeline project.

On March 11, the Illinois Commerce Commission decided to launch an investigation after allegations surfaced about mismanagement and questionable ties to contractors.  At the same time, Wisconsin Energy is seeking an approval for a $5.7 billion buyout of Peoples’ parent company, Integrys Energy Group.

Madigan, Mayor Emanuel, and CUB filed a public motion March 25 with the ICC to delay the consideration of the sale until the ICC’s investigation is complete.   However, the ICC has decided to consider the investigation and the merger as separate entities, according to Crain’s.  (The ICC is currently set to decide by early July whether to approve the merger.)

Responding to allegations about the timing of the project, Wisconsin Energy says that it is committed to meeting the 2030 deadline— that is, if it continues to receive proper cost recovery. But is that deadline nothing but a pipe dream–and how do we reduce the damage to consumers?