In a two-and-a-half hour hearing last Thursday, the IllinoisCommerce Commission brought together various representatives fromgovernment bodies as well as state utilities to discuss and posequestions regarding the current crisis involving high natural gasprices.

During the first half of the meeting, representatives from theCook County State’s Attorney office, the Illinois AttorneyGeneral’s office, City of Chicago Department of the Environment andthe Citizens Utility Board (CUB) raised specific questions on abroad scale, from buying futures and hedging, to extended paymentplans. The groups also discussed ways of bringing more publicityand education to consumers about energy management andconservation.

“There were questions about conflicts with the localdistribution companies (LDC) being the children of holdingcompanies that also have exploration, trading and developmentoperations and what we should know about those,” said DavidFarrell, spokesman for the ICC.

In the second session of the meeting, utilities Nicor Gas,Peoples Gas, Illinois Power, CILCO and AmerenCIPS fielded questionsfrom the commission involving business practices such as gas buyingand affiliate rules.

“I read the annual reports of some of the holding companies, andthey may have been very innocent statements when written, but inthe light of yesterday’s (Thursday) hearings, they have a differentring to them,” said ICC Chairman Richard L. Mathias. “Such ashaving the holding company say that by owning a generation plant aswell as a distribution company it will increase their leverage inthe market. Again, it could be a very innocent statement, but undercurrent conditions we have been asked by our governor to undertakean investigation, so I think that there has to be a healthyskepticism on the part of the commission.”

To investigate, Mathias said he asked for the stated policyguidelines of each of the holding companies in regards to affiliatetransactions, communications, and any prohibitions on transactionsand communications with the affiliates.

Farrell noted that at one point during the meeting, Marty Cohenof CUB said that it might not be the producers that are responsiblefor the run-up in natural gas prices, but that it might have moreto do with the traders. Farrell said the ICC believed that Cohenmight be on to something with his “follow the money” theory.

The next meeting is Wednesday (Jan. 24), which will includeproducers and organizations related to producers such as the EnergyInformation Agency (EIA). Farrell said the statements and answersgathered from both meetings will help provide the basis for aseries of questions that will be on the commission’s website aspart of a notice of inquiry (NOI), asking for virtually anyone withinterest in the subject matter to respond. The broad series ofquestions will focus on all aspects of the natural gas industry,including energy management, as well as people’s views of themarket itself.

The commission also tested the waters for the implementation ofa LDC-backed publicity campaign. “I asked the LDCs presidents tosee if there should be a cooperative public service informationprogram,” said Mathias. “It would be a combined program of all theLDCs in Illinois and would highlight the assistance that might beavailable to customers for paying bills, among other things.”Farrell said the commission proposed that at least a $5 millionfund be developed by the LDCs for educational energy programs andpublicity on energy conservation. The chairman said he would liketo see it established during the calendar year 2001.

The ICC voted to hold the hearings and investigation at the urgingof Gov. George H. Ryan and various legislators due to consumers’concerns over their gas bills (see Daily GPI, Jan. 12). Once the special investigationis completed sometime this spring, a final report includingtranscripts from the hearings and accompanying recommendations will beforwarded to the Energy Cabinet that Ryan formed earlier this month(see Daily GPI, Jan. 10).

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