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“A complete disaster”: The Peoples’ pipeline replacement program

A new report shows that a Peoples Gas pipeline replacement program has so far been full of hot air— and not much else!

A recently released audit reveals Peoples’ multi-billion-dollar project to replace the City’s aging pipeline infrastructure has been plagued by mismanagement, inadequate quality controls, and faulty reporting and analysis.

Consider this damning fact: The audit shows that the program hasn’t actually reduced gas leaks. Leaks have actually increased over the time period.

And Illinois ratepayers have been footing the bill for this “work.” During this time, Peoples Gas has received three hefty rate hikes, as projected costs for the program have ballooned to $4.6 billion over the past five years.  This could cause consumer rates to double over the next decade.  Think your rates are high now?  Just wait.

The audit was commissioned by the Illinois Commerce Commission (ICC) after whistleblower letters to the ICC, CUB, and Illinois Attorney General alleged that the program has been plagued by mismanagement and questionable ties to contractors. (Illinois Attorney Lisa Madigan is also conducting an investigation.)

The report, released Wednesday, stated:

“Peoples Gas does not place a high priority on developing and maintaining a strong cost management culture… This lack of priority inevitably causes cost management capabilities to fall short. … Liberty found no substantial cost analysis.”

In the midst of these glaring problems, Wisconsin Energy (WE) is seeking approval for a $5.7 billion buyout of Peoples’ parent company, Integrys Energy Group. WE has pledged generally to follow Liberty’s advice, but has refused to commit to completing the pipe replacement by 2030 without “adequate cost recovery.”  The bottom line is we have to get to the bottom of these troubling questions about the pipe-replacement program before moving forward with the merger.

At a briefing yesterday, new ICC Chairman Brien Sheahan joined with other commissioners in pledging that ratepayers wouldn’t shoulder the cost of the program’s mismanagement.

We couldn’t agree more, and echo what one spokeswoman for the Illinois Attorney General told Crain’s Chicago Business: “This program is a complete disaster.”