ICC Concludes No Price Manipulation by Utilities

A two-month-long investigation into Illinois' high gas prices has concluded that there was no market manipulation, with most of the increases "due largely to factors that affected supply and demand." The Illinois Commerce Commission released its findings last week, and found that utilities had provided price hike warnings, but consumers did not comprehend their magnitude until winter heating bills arrived.

In late January, Gov. George H. Ryan called for the ICC to open a Notice of Inquiry (NOI) to investigate the natural gas prices in the state (see NGI, Feb. 5). The NOI resulted from consumer complaints, two ICC hearings in two weeks and a call by Ryan to investigate. The investigation focused on affiliate rules for non-regulated subsidiaries and their parent companies.

In all, the commission asked about 30 questions spanning several subject areas related to the causes and consequences of the high gas prices. The NOI had 13 respondents, including 10 utilities and three non-utility organizations.

"In reviewing the record of this investigation, the NOI staff concludes that the higher gas prices of the last 12 months have been due largely to factors that affected supply and demand," said the report. "No acts of market manipulation were reported to the commission. Despite efforts by the utilities and the commission to provide advanced warning of the higher prices, consumers were still unprepared for the magnitude of their winter heating bills."

The NOI found that a "significant contributor to the unwanted surprise was the record cold weather experienced in November and December, which pushed up wholesale (and retail) energy prices as well as the demand for space heating fuel."

Several recommendations were made during the proceeding, including the following:

Utilities should continue to inform customers of anticipated gas price movements, conservation measures and available budget and deferred payment plans. Utilities also should continue to review and evaluate their communications and collections policies to determine what improvements may be implemented.

The ICC should invite utilities and others to participate in staff-sponsored workshops on energy usage estimates. These efforts would help reduce the degree to which inaccurate energy use estimates lead to under- and over-collections from customers during price volatility.

Utilities should consider ways to limit ratepayers' exposure to gas price risk through risk management practices.

To review the entire report, visit the ICC's web site.

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