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ICC Holds First of Gas Price Hearings

ICC Holds First of Gas Price Hearings

In a two and a half hour hearing last Thursday the Illinois Commerce Commission brought together various representatives from government bodies as well as state utilities to discuss and pose questions regarding the current crisis involving high natural gas prices.

During the first half of the meeting, representatives from the Cook County States Attorney office, the Illinois Attorney General's office, City of Chicago Department of the Environment and the Citizens Utility Board (CUB) raised specific questions on a broad scale from buying futures and hedging, to extended payment plans. The groups also discussed ways of bringing more publicity and education to consumers about energy management and conservation.

"There were questions about conflicts with the local distribution companies (LDC) being the children of holding companies that also have exploration, trading and development operations and what we should know about those," said David Farrell, spokesman for the ICC.

In the second session of the meeting, utilities Nicor Gas, Peoples Gas, Illinois Power, CILCO and AmerenCIPS fielded questions from the commission involving business practices such as gas buying and affiliate rules.

"I read the annual reports of some of the holding companies, and they may have been very innocent statements when written, but in the light of yesterday's hearings, they have a different ring to them," said ICC Chairman Richard L. Mathias. "Such as having the holding company say by owning a generation plant as well as a distribution company it will increase their leverage in the market. Again, it could be a very innocent statement, but under current conditions we have been asked by our governor to undertake an investigation, so I think that there has to be a healthy skepticism on the part of the commission."

To investigate, Mathias said he asked for the stated policy guidelines of each of the holding companies with regards to affiliate transactions, communications, and any prohibitions on transactions and communications with the affiliates.

Farrell said that at one point during the meeting, Marty Cohen of CUB said that it might not be the producers that are responsible for the run-up in natural gas prices, but that it might have more to do with the traders. Farrell said the ICC believed that Cohen might be on to something with his "Follow the money" theory.

Wednesday Jan. 24 will be the next meeting, which will include producers and organizations related to producers such as the Environmental Information Agency (EIA). Farrell said the statements and answers gathered from both meetings will help provide the basis for a series of questions that will be on the commission's web site as part of a notice of inquiry (NOI), asking for virtually anyone in the world with interest in the subject matter to respond. The broad series of questions will focus on all aspects of the natural gas industry, including energy management, as well as people's views of the market itself.

The commissioner also tested the waters for the implementation of a LDC-backed publicity campaign. "I asked the LDC's presidents to see if there should be a cooperative public service information program," said Mathias. "It would be a combined program of all the LDCs in Illinois and would highlight the assistance that might be available to customers for paying bills among other things." Farrell said the commission proposed that at least a $5 million fund be developed by the LDCs for educational energy programs and publicity on energy conservation. The chairman said he would like to see it established during the calendar year 2001.

The ICC voted to hold the hearings and investigation at the urging of Gov. George H. Ryan and various legislators due to consumers' concerns over their gas bills (see NGI, Jan. 15). Once the special investigation is completed sometime this spring, a final report including transcripts from the hearings and accompanying recommendations will be forwarded to the Energy Cabinet that Ryan formed earlier this month.

Alex Steis

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