Constellation Energy Group announced plans to buy most of Nicor Energy LLC’s remaining competitive energy supply contracts covering about 8,000 commercial and industrial gas and electric customers in three midwestern states. Constellation said its affiliates will serve electricity to customers in Michigan and Illinois, and natural gas to customers in Michigan and Indiana. Closing of the deal is expected by April 1. Terms were not disclosed.

Last November, the staff of the Security and Exchange Commission (SEC) told Nicor Inc., which is a 50% partner in Nicor Energy LLC with Dynegy, that it was conducting a formal inquiry into the utility company’s performance-based rate program in Illinois as well as Nicor Energy’s accounting methods. Nicor recently said it was advised that the SEC staff plans to recommend civil action against Nicor Energy, alleging that its accounting methods violated the Securities Exchange Act.

The retail marketing company struggled last year and Nicor decided to write down its investment in the joint venture to zero. Its maximum exposure and guarantees on behalf of Nicor Energy are about $29 million, the company said in its annual earnings report.

In February, Nicor Energy announced the sale of 132,000 commercial and residential customer accounts in the deregulated natural gas markets in northern Illinois to Dominion Retail Inc. Nicor and Dynegy also announced plans to sell off the retail energy provider’s remaining assets and exit the business.

“We have less than 2,000 remaining customers. The ones that we sold today represent close to 35% of the revenues of Nicor Energy,” said Nicor Inc. spokesman Mark Knox. “We’re in the process of negotiating the final disposition of some of those remaining contracts, and that should be completed in the near future. It probably still will be some time before all the receivables and payables are transferred, but we’re pretty close to having sold the rest of the assets.”

He said the SEC investigation has focused on accounting errors related to unbilled revenue. “We had some bad methodologies in place for estimating unbilled revenue and when we did our year-end audit in 2001 we discovered that the actual revenues [were not] matching the estimated revenues. The customers were never impacted.” Knox said Nicor took about $9 million in losses in 2002 for Nicor Energy.

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