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

Commission spokesman David Farrell said a series of hearingswill be held, the first of which will be on Jan. 18 with localdistribution companies. Another meeting is tentatively scheduledfor January 24 with producers.

“This is not a witch hunt, or total fishing expedition,” Farrellsaid. It is to receive “assurances that people in Illinois are notbeing taken advantage of.” The spokesman said he believes theinvestigation will reveal that it is simply the way the marketworks. “The prices were not there, nobody drilled, all kinds of newuses for gas emerged, the economy took off, and we have morehousing stock under construction within the last five years thanprobably during the previous 20.”

In addition to the special investigation, the commission alsoasked its staff to expedite its annual prudence reviews of Illinoislocal distribution companies’ (LDC) gas purchases for the past 12months.

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

Robert J. Kelter, director of litigation for the CitizensUtility Board (CUB), said, “I would be surprised if very much comesout of these hearings. I assume that they are going to ask peopleto give testimony, but I am not sure what a public interest groupcan say. Prices are way too high, the market is out of control, andconsumers are getting screwed.” Kelter said. CUB asked the ICC toorder Peoples [Gas] to start hedging more, but the commission didnot do it. He said if the commission had listened it might haveprevented some of the current problems.

Kelter said he hoped the investigation would delve into whetheraffiliates of Peoples Energy and Nicor Gas were purchasing gas atbetter prices than their utilities. “If the utility’s affiliateshave been able to purchase gas cheaper than the utilitiesthemselves, we want to know why.”

Once the special investigation is completed sometime thisspring, a final report including transcripts from the hearings andaccompanying recommendations will be forwarded to the EnergyCabinet which Ryan formed earlier in the week. The report will thenbe forwarded to the governor, and then on to the general assemblyin an effort to develop guidelines for a statewide energy policy.

Kelter remains pessimistic about the investigation, “I don’t seethe ICC doing a thorough investigation on whether gas producers aregouging Nicor and Peoples in some way,” he said.

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

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