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
"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.