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Breaking: AG, CUB call for overhaul of Peoples Gas pipeline project

CUB has joined Illinois Attorney General Lisa Madigan in calling for the restructuring of a costly and “disastrous” Peoples Gas pipeline-replacement project that is billions of dollars over budget.  The development comes weeks after Crain’s Chicago Business reported that utility officials may have withheld ballooning cost estimates from regulators while the parent company of Peoples Gas sought a lucrative merger with Wisconsin Energy.

“The public needs to be aware of what’s going on,” Attorney General Lisa Madigan said at a Chicago news conference today, “so they can hold Peoples Gas accountable.”

20151109_105440The Peoples Gas Accelerated Main Replacement Program (AMRP) was approved in 2009 to replace 2,000 miles of aging Chicago gas mains by 2030.  The original price tag of the program was about $2.2 billion, to be paid for largely through a special charge on customers’ natural gas bills.

Since then, the program’s projected costs have ballooned to more than $8 billion. This past May, an ICC-ordered audit by Liberty Consulting Group confirmed that the project is rife with mismanagement and runaway costs.  In fact, the audit found that gas leaks had actually increased in Chicago since the program began.

Further complicating matters, in the middle of this fiasco, Wisconsin Energy was attempting to acquire Peoples Gas’ parent company, Integrys Energy Group.  In June, Wisconsin Energy won Illinois Commerce Commission (ICC) approval of the $5.7 billion buyout.

However, a new audit report released by Liberty indicates that Peoples Gas was aware of the updated $8 billion cost estimate in January—and did not reveal it until after the sale was finalized, according to Crain’s Chicago Business.  Madigan said Monday that the answers provided by executives at that time appeared to be “incomplete, misleading and evasive,” and regulation can’t work in that environment.

The Attorney General and CUB filed two petitions Monday.  The first asks the ICC to open a proceeding to restructure the AMRP, encouraging the ICC to “start from scratch.”  The other asks the ICC to investigate whether Peoples violated the Public Utilities Act by withholding the vital $8 billion cost estimate during the merger, and to enact the appropriate penalties if it’s found the company behaved inappropriately.

“The disastrous project has already drained far too much money from Chicago seniors and families because of mistakes and mismanagement by Peoples Gas,” CUB Executive Director David Kolata said in a statement. “It’s time to stop the bleeding.” (Read the full-statement.)