Anonymous Letters Put UtiliCorp in Hot Water
Investigations in several states are getting under way into
alleged illegal profit-taking by UtiliCorp United in Missouri,
Michigan, Nebraska, Minnesota and Iowa. An anonymous letter from
someone who claimed to be a current employee for UtiliCorp was sent
to state regulators alleging the company's Gas Supply Service
Department (GSS) took part in improper actions in reselling natural
gas to customers in these states.
"Personnel are paid bonuses based on the value that can be
extracted from managing the assets paid for by the Missouri Public
Service (MPS) ratepayers," the letter said. The anonymous author
said that value is extracted in numerous ways that are undetectable
to staff audit efforts. One method included in the letter was for
UtiliCorp employees to sell a first of the month "put" to
suppliers, invoicing the put premium on a separate invoice that
would never be included in audited documentation. If prices drop,
the supplier puts first of the month gas to MPS.
Another scheme alleged in the letter includes capacity releases.
"Operations personnel extract one-to-two cents per release by doing
buy-sells with MPS capacity, instead of doing a posted release,"
said the letter. "They look at the lowest credit amount possible to
report, instead of maximizing the capacity release credit." The
anonymous author speculated that these actions are taken to reach
the unit's lofty profit goal of $10 million. "Due to the emphasis
on earnings, GSS's top priority is earnings, not providing
efficient, reliable, economic gas supplies," the author concluded.
Jerry Cosley, a UtiliCorp United spokesperson said, "We can say
without qualification, that in no way would we approve of any
improper behavior or business practice, so we are conducting our
Missouri appears to be the first state out of the gate on the
investigation trail as the staff of the Missouri Public Service
Commission has recommended an investigation be conducted into the
allegations. An MPS representative said that UtiliCorp denied the
allegations of impropriety, but supports the staff's request to
open an investigation.
Iowa's Consumer Advocate is investigating the UtiliCorp charges
in that state, said Chuck Seel, a spokesman for the Iowa Utilities
Board. Seel said the Iowa and Minnesota letters, and the Michigan
and Missouri letters, appeared to be similar to one another. He
added that an observer from the IUB and a representative of the
Consumer Advocate will attend a meeting next week with UtiliCorp to
discuss the situation.
Cosley said UtiliCorp intends to conduct its own internal
review, and would stay in touch with all of the affected regulatory
commissions and report its findings to them.
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