Chicago Gas-price increases ignite criticism

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GAS-PRICE INCREASES IGNITE CRITICISM

By Heather Vogell and Noah Isackson Tribune Staff Writers December 31, 2000 The day after local utilities announced that natural gas bills will shoot up dramatically in January, Mayor Richard Daley and consumer advocates blasted them and called for an investigation into gas-buying practices.

"This is not going to go away," Daley said. "A company can't come up right before New Year's and say, `We are going to increase prices,' without any objection."

Peoples Energy announced late Friday that January bills would reflect a near tripling of gas charges since last January, translating into an average increase of $200 to $239. Customers will see an increase of 43 percent to 45 percent over December charges.

A spokesman said Nicor Gas decided to increase its gas charges by about 36 percent in January.

Though the utilities blamed market forces for the jump, Jonathan Goldman, director of policy and governmental affairs for the Citizens Utility Board, said their explanations so far are coming up short.

Just last week, Peoples and Nicor raised the gas charge rates they had planned for January. The companies had filed those rates only days before with the Illinois Commerce Commission.

"How could their projected price change so dramatically in three days?" Goldman asked. "This is part of what raises the question of how effectively are they managing their gas supply."

Advocates and public officials, who also are calling for a federal investigation into a national gas price increase, said they will closely watch the companies' annual review by the commerce commission, during which the utilities must provide documentation to justify the prices they have charged consumers.

Daley said state lawmakers should push the commerce commission to investigate the reasons for the January increase.

Nationally, natural gas storage supplies have been lower this year than in previous years. Partly because more natural gas-fired plants have come online, prices have risen and demand has increased even during summer, when utilities traditionally buy gas at cheaper prices to store it.

Facing questions on whether local utilities set aside enough gas last summer in anticipation of the price increase, Nicor spokesman Craig Whyte said Nicor had filled its seven storage fields to capacity. But the utility still must rely on short- and long-term contracts for gas that are subject to market whims, he said.

"I quite honestly have to think we have done everything possible," Whyte said.

Whyte said storage accounts for about 30 percent of the gas used in winter to serve Nicor's 1.9 million customers, adding that the utility has the most storage capacity of any gas distribution company in the state.

He could not say how much gas the company was buying on the spot market, where prices last week hovered around the amounts that the utilities will charge customers next month.

A Peoples Energy spokesman could not be reached for comment Saturday. Both utilities have emphasized that they do not mark up the prices of gas they buy and sell to consumers.

Daley and Goldman also criticized the utilities for the timing of their announcement on the increase.

"It's the public relations textbook case of how to minimize the impact of an announcement. If you've got to release bad news, you do it late on Friday, and preferably late on the Friday of a holiday weekend," Goldman said.

Peoples spokesman Luis Diaz-Perez on Friday defended the announcement, saying, "I don't think it's fair to say we're trying to hide it when we've done our level best to communicate this with the public."

Whyte said Nicor, which has not issued a news release announcing the price jump, was planning to post notice of the increase on its Web site Tuesday morning.

Meanwhile, Daley said that despite the latest increase, the city would not reconsider its decision not to use the millions of dollars it will collect in gas taxes for a consumer rebate or similar form of relief. He said the tax dollars already were earmarked to support city programs.

In recent days, city officials have been touting a new payment option on January's bills that will allow customers to enroll automatically in a budget plan, as well as a city program that helps qualified homeowners replace old furnaces and make other energy-saving repairs to their homes.

http://www.chicagotribune.com/news/metro/chicago/printedition/article/0,2669,SAV-0012310301,FF.html

-- Martin Thompson (mthom1927@aol.com), December 31, 2000


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