Jan. 23--An audit of a multibillion-dollar program to replace natural gas pipes in Chicago is being withheld from public scrutiny, raising the ire of consumer advocates and the Illinois attorney general's office.
According to a motion filed Thursday by the attorney general's office, the city of Chicago and Citizens Utility Board, the audit report, prepared by The Liberty Consulting Group evaluating the program, would shed light on a program "beset with poor management and dramatic cost overruns."
Peoples Gas is replacing about 2,000 miles of pipe in the city and charging its utility customers to pay for the project.
The audit, filed in a merger application by Peoples' parent Chicago-based Integrys, was sealed by the Illinois Commerce Commission.
Attorney General Lisa Madigan, the city and the citizens board are fighting to have the audit unsealed.
Integrys is trying to justify to state regulators why it should be acquired by Wisconsin Energy Corp. for $5.7 billion in cash and stock.
In 2009, Peoples estimated the cost of the replacement program, to be completed over 20 years, at $2.2 billion. Costs have doubled, according to the motion to unseal the audit.
Under state law, the program cannot increase rates for utility customers more than 5.5 percent in any given year.
The idea behind the replacement program is to boost pipe pressure nearly a hundredfold, which would prevent water from seeping into pipes and freezing and cracking them.
Peoples Gas spokeswoman Jennifer Block on Thursday blamed the city and legislators for the increase in costs.
"Since launching in 2011, our infrastructure investment has faced many hurdles, including challenges to our recovery mechanism, new city of Chicago regulations and new legislative requirements," she said.
Peoples has installed 575 miles of new pipe, Block said, and relocated 60,000 gas meters.
"We are committed to investing more than $300 million this year on prudent infrastructure upgrades, which will ensure the continued safe and reliable supply of natural gas to our customers.We will continue our full cooperation with commission staff and Liberty Consulting in its review of our infrastructure project and the implementation of recommendations received in the final report," she said.
Madigan's office said commission staff provided "no formal explanation" for its decision to designate the report as confidential.
It noted that ratepayers are ultimately the ones paying for the audit, calling it "bad public policy."
"It would deny the public access to the most recent review of a troubled (multibillion-dollar) program that, only 18 months ago, the Commission found lacked details about costs, resource needs and project management requirements," the filing says.
Madigan's office said in filings that the company is asking consumers to pay now for pipes it isn't capable of getting into the ground quickly enough based on its employment levels and its previous record of replacing pipe.
After years of funding misstarts, in 2013 the utility successfully lobbied the Illinois legislature to add a surcharge to customers' bills to pay for the program, which it said would increase natural gas delivery costs to customers an average of about 4 percent per year over 10 years.
In 2011, an appellate court judge tossed out a similar surcharge that Peoples Gas added to heating bills for the pipe replacement program. The Commerce Commission had approved the charge, but consumer groups took the issue to court and won.
Then in 2011, Peoples Gas tried to latch on to Commonwealth Edison-backed legislation but was rebuffed by the legislature.
In 2013, it floated legislation that followed the same road map as ComEd, which is operating under a formula-based rate that gives it faster and more frequent returns as it invests in a multibillion-dollar upgrade to the electrical grid. That bill stalled in Springfield.
Peoples Gas said the typical 11-month-long courtlike rate-setting process usually required to pay for such projects could stretch to 40 years from 20 years and cost ratepayers an additional $244 million.
jwernau@tribpub.com
Twitter @littlewern
