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Madigan reaches $18.5 million settlement with Peoples Gas

May 11, 2016 | WLSAM Staff

(CHICAGO) Attorney General Lisa Madigan announced Tuesday two settlements totaling $18.5 million with Peoples Gas Light and Coke Company and its former parent company Integrys Energy Group, and current owner WEC Energy Group, for misleading consumers about the cost of its Accelerated Main Replacement Program.

Madigan and the Citizens Utility Board filed petitions last year with the Illinois Commerce Commission against Peoples Gas after an audit report found the energy company’s main replacement program would cost consumers $8 billion, according to a statement from Madigan’s office.

In 2009, the ICC approved Peoples Gas’ proposal to replace 2,000 miles of aging gas mains in Chicago, according to a statement from CUB.

Peoples Gas now admits that its executives withheld the estimated cost from the ICC in a 2015 hearing concerning its merger with WEC, Madigan’s office said. The Chicago Sun-Times previously reported that executives repeatedly told commissioners at the hearing that they had no projections on the costs of replacing gas mains in Chicago beyond a publicly announced estimate of $4.5 billion, Madigan’s office said.

For the first settlement totaling $11 million, the energy companies agreed to pay $10 million to Peoples’ customers and $1 million to reconnect low-income customers whose service was shut off and to forgive their outstanding debt, Madigan’s office said. For the second settlement totaling $7.5 million, the energy companies agreed to pay $4.5 million to the state of Illinois and $3 million to Peoples’ “Share the Warmth” fund, which provides heating grants to limited and fixed-income households.

Both settlements are subject to the ICC’s approval, and consumer refunds will begin no more than 90 days after their approval, Madigan’s office said.

Madigan and the CUB will continue to request that the ICC restructure and start over the AMRP, Madigan’s office said.

“I will continue to fight to overhaul the program, which still threatens the affordability of Peoples’ Gas service,” Madigan said in the statement. “Peoples Gas’ customers already pay some of the highest utility rates in the Midwest, and they should not bear the burden of an unjustified and overpriced program.”

Complaint: Peoples Gas officials ‘misled’ regulators about cost overruns

Feb 10, 2016 | WLSAM Staff

(CHICAGO) Top officers of Peoples Gas “knowingly misled” state regulators about the ballooning cost of a multibillion-dollar upgrade program to pave the way for a 2015 merger, according to a complaint filed by Attorney General Lisa Madigan and a utility watchdog.

When executives for Peoples and parent company Integrys testified last spring before the Illinois Commerce Commission about the company’s merger with Wisconsin Energy, they repeatedly told commissioners they had no projections on the costs of replacing gas mains in Chicago beyond a publicly announced estimate of $4.5 billion.

In a complaint filed last week to the ICC, Madigan and the Citizens Utility Board say a state audit showed company officials had seen internal reports that the estimated cost— paid for by fees tacked on to Chicagoans’ gas bills— had reached more than $8 billion, the Chicago Sun-Times is reporting.

Madigan and the Citizens Utility Board called on the ICC to again put gas company executives under oath, to find out whether they violated state law by not disclosing the soaring costs of the program utility company’s Accelerated Main Replacement Program.

“This is a program that has not been good for consumers,” said David Kolata, executive director of the Citizens Utility Board. “We need a thorough investigation of who knew what and when they knew it, and what went wrong.”

Kolata said Tuesday that any violation of state law should require Peoples to pay fines, and possibly refund money to customers.

When he testified in May 2015, former Integrys CEO Charles Schrock repeatedly told commissioners the company had not completed cost estimates for the gas main replacement program since 2014, when the company admitted overruns had more than doubled the original price tag of $2.2 million.

In fact, Madigan said state audits showed Schrock and other company officials received a report a month before the hearing that showed costs had climbed to $8 billion. Schrock received $34 million in cash and stock after the merger went through, according to company filings.

A Peoples Gas spokesman did not immediately respond to questions from the Chicago Sun-Times on Tuesday.