Illinois Commerce Commission suspends Peoples Gas project

WEC Energy Group headquarters building
WEC Energy Group's Milwaukee corporate headquarters.

The Illinois Commerce Commission today suspended the troubled Peoples Gas Accelerated Main Replacement Program that’s now being shepherded by Milwaukee-based WEC Energy Group Inc.

WEC Energy Group headquarters building
WEC Energy Group’s Milwaukee corporate headquarters.

Peoples Gas, which provides natural gas to the Chicago area, is one of the utilities Wisconsin Energy Corp. assimilated in the $9 billion acquisition of Integrys Energy Group that formed Milwaukee-based WEC Energy Group in June.

The ICC is investigating Peoples and Wisconsin Energy, which have been accused by Illinois Attorney General Lisa Madigan of withholding information about the ballooning costs of the gas main replacement program in order to win its approval for the acquisition.

Gale Klappa has indicated leaders at Wisconsin Energy didn’t know prior to the acquisition that costs on the project, initially projected to cost $2.2 billion, had risen to more than $8 billion.

The suspension doesn’t actually stop work on the project, which is replacing aging natural gas infrastructure in the City of Chicago. But it does begin a process of reevaluating the regulatory treatment of the project and reviewing its scope, pace and cost with stakeholders and utility customers.

“Today’s action calls for stakeholders to work together in guiding the Commission as we reevaluate Peoples’ gas system modernization work, and I’d like to thank the attorney general, Citizens Utility Board and the City of Chicago for their advocacy and assistance,” said chairman Brien Sheahan. “While we appreciate the efforts thus far by the new management of Peoples Gas to take positive steps in a short time period, such as identifying new project management efficiencies and improving coordination with the City of Chicago, we have seen the growing cost estimates, delayed progress and overall mismanagement of AMRP, and it’s time to turn the ship around by suspending the program as we know it to exist today. I want to be clear that safety is our foremost concern and while the Commission reevaluates the project, Peoples remains responsible under state and federal law to maintain pipeline safety. The physical work of repairing, rehabilitating, and replacing high-risk pipe cannot come to a halt.”

“Commission Staff emphasizes that work on the modernization program will not be interrupted while the Commission and stakeholders, including Peoples Gas, review the program’s many parts, including scheduling, cost estimates, responding to audit recommendations, customer notification and coordination, the impact on rates and affordability, and the long-term monitoring plan. At the same time, because the work on the system will not stop, Commission Staff will continue its work with the Company and Liberty Consulting to evaluate the project’s plans and progress,” said Gene Beyer, chief of the ICC’s Public Utilities Bureau.

The ICC will begin a series of six workshops for stakeholders on Jan. 11, followed by a policy session. It will issue a staff report on or before May 31, 2016 and then a final order to implement binding requirements for the new program.

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Molly Dill, former BizTimes Milwaukee managing editor.

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