March 10--Peoples Gas is dropping its opposition to releasing the results of an interim audit of its multibillion-dollar gas main replacement program.
The move comes four days after the Illinois Commerce Commission said it would consider at its meeting Wednesday whether to open an investigation into allegations detailed in a whistleblower letter received by the commission last month. The anonymous letter alleged that Peoples' parent, Integrys Energy Group, and Wisconsin Energy, which seeks to acquire Integrys, "are working overtime to suppress the audit findings that will uncover major safety concerns for the citizens of Chicago."
Received by the commission Feb. 17, the anonymous letter was posted on the commission's site last month but generated little interest until the commission's announcement last week. Staff members have recommended an investigation.
On Monday, Peoples sought to get ahead of what that meeting may hold for the company. In a filing with the commission, the company said it is withdrawing its request that the interim audit by Liberty Consulting remain confidential.
"We wanted a full, complete report to come from Liberty," John Kleczynski, president of Peoples Gas and North Shore Gas, said in an interview. "Now, with all of the buzz around this hint of lack of transparency, it's important to us that we be transparent. We've got nothing to hide in that report."
It is an about-face for the natural gas company, whose program to replace about 2,000 miles of pipe in the city, and have customers pay for it, has been widely criticized by consumer advocates and the Illinois attorney general's office. As a result of the commission's own concerns about the utility's performance, Liberty Consulting Group was hired to audit the program.
Liberty's final audit is expected to be filed with the commission later this spring, but it has already submitted to the commission an interim report, which the commission sealed.
In January, the attorney general's office, as well as the city of Chicago and the Citizens Utility Board, sought to have the interim audit unsealed. The motion said the report would show a program "beset with poor management and dramatic cost overruns." Illinois Attorney General Lisa Madigan has said the program cost has jumped to $4.6 billion, which would, in effect, double base rates for Chicago households in nine years.
Peoples estimated in 2009 that the 20-year program would cost $2.2 billion. On Monday, Kleczynski would not give any estimate of the project's current cost.
The anonymous letter to commission general counsel Matthew Harvey asks for a full investigation into allegations that former members of management are benefiting from outside contracts on the project and that "there is an internal investigation from Integrys ongoing now about invoices from contractors for services never provided. We have been told the project is a (sic) ATM machine for contractors and consultants because those who are suppose (sic) to be in a position of oversight are the wolves watching the hen house."
Until Monday, Peoples had backed the commission's sealing of the audit, reasoning that it was better to wait for the final report. The company has been aware of the anonymous letter for the past two weeks and was dealing with the allegations internally, Kleczynski said,
"There's a serious need for transparency about the program's costs and performance record, which is why we've advocated that the report be made public to allow for greater scrutiny in light of the proposed merger," Natalie Bauer Luce, a spokeswoman at the attorney general's office, wrote in an email.
So far, almost 580 miles of new pipe have been installed and 90,000 meters changed.
Kleczynski, a 28-year company veteran who was named president last fall, said the company has undertaken some of the recommendations from Liberty. Among those are breaking down segments of the project into smaller chunks to shorten the length of time that customers are disrupted.
"We've been working very collaboratively with Liberty to make changes to the project," Kleczynski said.
mepodmolik@tribpub.com
