CUB Hails Historic Peoples Gas Refund, Applauds Madigan and Daley for Standing With Consumers

20 January 2006

The Citizens Utility Board (CUB) Tuesday hailed a record refund package worth more than $196 million for Peoples Gas customers and commended attorneys for Attorney General Lisa Madigan and Chicago Mayor Richard Daley for negotiating one of the best settlements ever seen in Illinois.

The refunds, which were announced Tuesday, settle a long-standing challenge to Peoples Gas' controversial dealings with disgraced energy trader Enron during the winter of 2000-2001, when gas prices skyrocketed. CUB has been working with the Attorney General's Office and the city for the last four years to get the Illinois Commerce Commission (ICC) to order the refunds.

"This is a great day for consumers. Not only is this the first natural gas refund of its kind in Illinois, but it's also one of the best rebate packages ever seem in Illinois. Period," CUB Executive Director David Kolata said. "And it couldn't come at a better time. Too many customers face the impossible choice between heating or eating. Between putting food on the table or paying for prescription drugs. On behalf of consumers, I'd like to thank Attorney General Madigan and Mayor Daley for fighting so hard to put this refund package together."

Earlier this month, the commission heard final arguments in the case and was set to rule on the refund recommendation, at any time. An ICC administrative law judge had recommended a $118 million refund, but the company was urging the agency to lower the amount.

Under the pack negotiated by Madigan and Daley's offices, consumers will receive a $100 million rebate on gas bills. In addition, the company will contribute $25 million into a fund to be used for weatherization, making it one of the largest weatherization programs in the nation.

Under the settlement, Peoples Gas also will reconnect gas service to nearly 12,000 customers who were disconnected for non-payment. All past due balances will be waived and the company will take steps to repair those customers' credit reports. The company also will be prohibited from recovering in rates an additional $52.3 million it has accrued in bad debt. Those costs, called "uncollectibles," are typically recovered in consumers' rates. Kolata explained that the value of the weatherization and energy efficiency funds will be much greater than $25 million.

"According to experts in the field, for every dollar invested in weatherizing homes, consumers achieve at least $3 in savings on their natural gas bills, and that's a conservative estimate," he added.

The refund stems from evidence uncovered by CUB, the City of Chicago and the Attorney General that shows how, under a five-year contract, Peoples Gas gave up control over its gas purchases and storage to Enron and its affiliates. Those companies then funneled profits from trading the gas -- originally intended for consumers' use -- to Enron and Peoples Energy, the gas utility's parent company.

As a result of the deals, during the winter of 2000-2001, when natural gas prices reached nearly $1 per therm, Peoples Gas had to purchase replacement gas to sell to consumers at record-high market prices. Those overcharges formed the basis of the refund proposed to the ICC.

CUB, a nonprofit, nonpartisan consumer group created by the Illinois Legislature in 1983, represents the interests of utility customers across the state. For more information on CUB, go to http://www.CitizensUtilityBoard.org , or call CUB's Consumer Hotline, at 1-800-669-5556.

Source: prnewswire

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