ICC Rules 5-0, Investigations Commence on LDCs

With December natural gas usage bills hitting extraordinarily hard in Illinois this year, city and state legislators have set out in search of clues as to why gas prices are through the roof. Spurred by the urgings of Gov. George H. Ryan and various legislators, the Illinois Commerce Commission voted 5-0 to open an investigation into this winter's natural gas price spikes. The ICC also directed its staff to put together its final report within 60 to 120 days (see Daily GPI, Jan. 10).

Commission spokesman David Farrell said a series of hearings will be held, the first of which will be on Jan. 18 with local distribution companies. Another meeting is tentatively scheduled for January 24 with producers.

"This is not a witch hunt, or total fishing expedition," Farrell said. It is to receive "assurances that people in Illinois are not being taken advantage of." The spokesman said he believes the investigation will reveal that it is simply the way the market works. "The prices were not there, nobody drilled, all kinds of new uses for gas emerged, the economy took off, and we have more housing stock under construction within the last five years than probably during the previous 20."

In addition to the special investigation, the commission also asked its staff to expedite its annual prudence reviews of Illinois local distribution companies' (LDC) gas purchases for the past 12 months.

"This year, of course, it will be different, because everyone including their sister and brother will be in reviewing and asking, 'were you consistent with the market generally,'" Farrell said. He pointed out that these reviews can normally take a year or more, but the commission asked for the 14 different prudence reviews to be completed by the end of the calendar year.

Robert J. Kelter, director of litigation for the Citizens Utility Board (CUB), said, "I would be surprised if very much comes out of these hearings. I assume that they are going to ask people to give testimony, but I am not sure what a public interest group can say. Prices are way too high, the market is out of control, and consumers are getting screwed." Kelter said. CUB asked the ICC to order Peoples [Gas] to start hedging more, but the commission did not do it. He said if the commission had listened it might have prevented some of the current problems.

Kelter said he hoped the investigation would delve into whether affiliates of Peoples Energy and Nicor Gas were purchasing gas at better prices than their utilities. "If the utility's affiliates have been able to purchase gas cheaper than the utilities themselves, we want to know why."

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 which Ryan formed earlier in the week. The report will then be forwarded to the governor, and then on to the general assembly in an effort to develop guidelines for a statewide energy policy.

Kelter remains pessimistic about the investigation, "I don't see the ICC doing a thorough investigation on whether gas producers are gouging Nicor and Peoples in some way," he said.

In a related action, ICC Chairman Richard Mathias asked the Federal Energy Regulatory Commission to look into whether the prices charged by natural gas pipeline companies to LDCs are the same as those published rates on file with the federal agency.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.