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Did Peoples Gas mislead state regulators? New AG/CUB filing makes the case

20160205_Peoples_fbIn a recent filing before state regulators, Attorney General Lisa Madigan and CUB argue that Peoples Gas “knowingly misled” state regulators or withheld from them the $8 billion estimated cost of a troubled pipe-replacement program.

The AG/CUB pleading, filed on Feb. 4, argues that utility officials may not have disclosed the figure–which was nearly quadruple original cost estimates–out of fear that it would hurt a proposed $5.7 billion merger with Wisconsin Energy. The merger, which was approved by the Illinois Commerce Commission in June 2015, led to lucrative payouts ($2.1 million to $34.9 million!!) for several utility executives.

At issue is the fact that those officials never revealed the cost figure during the merger approval process last year–specifically when testifying at a May 20 ICC meeting. However, evidence shows that employees of the utility had known of the $8 billion figure since November of 2014. Top executives knew of the estimate weeks and maybe months before the May 20 meeting, the AG and CUB argue.

However, it wasn’t until July of 2015, after the ICC approved the merger, that regulators were informed of the $8 billion cost estimate. The AG’s office has estimated that the program could cost every Peoples residential heating customer an average of nearly $7,700 over the remaining life of the project. “Peoples’ customers already pay some of the highest natural gas rates in the Midwest,” the AG’s office said.

CUB Executive Director David Kolata said in a statement that the findings are disturbing. “We thank the ICC for its leadership in this case, and we urge it to issue subpoenas to force Peoples Gas officials to testify under oath as to why the utility did not reveal the cost estimate in a timely manner,” Kolata said. “Chicagoans are paying for a program that has been plagued by irresponsible spending, and they deserve the truth.”

In 2009, the ICC approved the Accelerated Main Replacement Program, or AMRP, a plan to replace 2,000 miles of aging Chicago gas mains. Chicago consumers pay for the AMRP through their natural gas bills.

The AG/CUB pleading is connected to a case investigating the company’s truthfulness about the cost estimates. In another case, the ICC is seeking input from consumer advocates and its own staff on how to reform the program.