Nicor Responds to Critics of Choice Program

In response to suspension of the expansion of its natural gas customer choice program by the Illinois Commerce Commission last week, Nicor Energy yesterday released a statement expressing its concern over the situation. The supplier also responded to negative claims made by the Citizens Utility Board (CUB), a non-profit utility watchdog group formed in Illinois in 1983.

"We're extremely disappointed about the decision,'' said Kevin Stoffer, CEO of Nicor Energy. "It's Illinois consumers who will suffer from this decision. We believe in choice for all customers, and this decision takes that opportunity away for customers in northern Illinois,'' Stoffer said.

Nicor Gas, the utility, currently allows all of its commercial customers and about 15% of its residential customers within its service area to participate in its Customer Select program. The ICC voted last week to launch an investigation into the program, and to suspend the company's plans of widening the choice program to all of its 1.9 million customers (see Daily GPI, Sept. 21).

Stoffer responded to the negative claims made by CUB. "Our marketing program has been forthright and thorough," Stoffer said. "All complaints from our customers have been resolved. The few problems we've encountered have been addressed and always, if customers were unhappy about their choice, we've released them from their contract with no cancellation fee."

Stoffer offered proof that Nicor Energy's customers were experiencing better rates. "Our customers are reaping the rewards of choice. About 40% of Nicor Energy customers are currently on a fixed rate no higher than 35 cents a therm. With natural gas prices anticipated to remain high through winter, customers who locked in this price will likely have heating bills between 30 and 50% lower than their neighbors who decided to stay with Nicor Gas. The remaining 60% of Nicor Energy's customers are on a variable rate. These customers have saved money as well, although because of the volatile nature of natural gas prices, there's no guarantee these customers will save money every month," Stoffer said. "Customers who selected Nicor Energy as their supplier during the program this year have saved almost 10% over the last five months. Their price for natural gas has been lower than the utility's in four of the past five months."

Robert J. Kelter, director of litigation for CUB, responded, "The fact that they can throw out some statistics about some customers being locked in at 35 cents a therm; what about the other customers? We asked them point blank if customers were saving, and they said, 'we don't know.'"

Kelter continued, "Nicor Energy is asking for customers to sign up with a program that only the most sophisticated industrial customers could possibly know what is going on. There is just a lack of information out there that would help customers understand how the gas market works, what is happening with prices, and how to make an informed choice."

"I think the commission is going to do a thorough investigation of the program. If the customers are doing so well, then that will come out in the context of the investigation," Kelter said. "The bottom line is, their solicitation gives customers the impression that they are virtually guaranteed to save 15%, when that is inaccurate. In the end, they just don't address the issue that people think they are signing up with the utility. Nicor does everything in their power to confuse customers about the relationship between Nicor Gas and Nicor Energy. They use the same name and logo, and they mark it in a way that gives people the impression that they are staying with the utility."

CUB expects that the commission will set the parameters for its investigation within the next week or two.

"We hope the Illinois Commerce Commission will resolve any outstanding issues and will be able to put choice back into the hands of consumers," Stoffer added.

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