CHICAGO (STMW) — The Illinois Commerce Commission on Wednesday announced an investigation into Peoples Gas’ controversial and pricey gas-main replacement program in Chicago after allegations by two whistleblowers.

Two letters delivered to ICC attorneys in February and March included claims the management audit of the program, being conducted by Liberty Consulting, has been undermined by Peoples Gas’ management. It also alleges the safety of the program has been compromised because of insufficient staffing, according to the commission.

Consumer advocates have warned the cost of the program has doubled at the expense of its customers. And Attorney General Lisa Madigan has warned base rates could double over the next decade if the costs of the program are not analyzed.

The investigation comes as Wisconsin Energy vies to acquire Peoples parent, Integrys Energy Group, for $5.7 billion.

In addition to the investigation, the ICC on Wednesday announced it would not make public an interim audit report until a final report is ready in April. On Monday, Peoples Gas withdrew its request with the ICC to keep the interim report confidential.

“We really felt transparency was in the interest of our customers, to help them support and trust the process of the audit,” Integrys spokeswoman Jennifer Block said. “We really feel, because of the misconceptions that were coming out, that would be in the interest of the general public.”

“We understand and respect the ICC final decision to maintain the confidentiality of the interim report.”

Integrys said it is cooperating with the investigation. “Integrys takes all allegations of wrongdoing seriously. If we become aware of any potential wrongdoing of any kind, we have protocols in place for investigating and taking action as appropriate,” the company said in a statement.

“We know there is room for improvement in the Accelerated Main Replacement Program, and we’re already implementing many of Liberty’s recommendations.”

In January the city of Chicago, Madigan and the Citizens Utility Board urged the ICC to make the interim audit report public. Madigan said the program cost has jumped to $4.6 billion from the initial $2.2 billion, which would double the rates for Chicago households over the next decade.

Madigan’s office is urging the program’s problems be addressed before a merger is approved.

“The whistleblower complaints absolutely must be investigated and resolved before any determination is made on whether or not a merger is in the public interest,” Madigan spokeswoman Maura Possley said in a statement. “The complaints reinforce serious concerns that we have expressed when Peoples requested its recent rate increase and now that it is seeking approval of this merger.”

Peoples Gas initially planned to replace 2,000 miles of aging pipes under the city by 2030. The company won the right to impose a monthly surcharge on customers to recover the costs of the program quicker. And in January, the ICC granted Peoples a $75 million rate hike, largely to pay for the program, according to CUB.

CUB Executive Director David Kolata said he’s pleased with the ICC investigation, but he, too, urged the investigation be concluded before a merger is approved.

“We want to make sure that the investigation is complete before any decision on the merger is made. We need to get to the bottom of why this program is not working, why the costs have accelerated as much as they have. And we need to solve it now because if we don’t, it’s going to be a really bad situation for the city of Chicago,” Kolata said.

The ICC on Wednesday said it would conduct its investigation in a “thorough and expeditious manner” in light of the proposed merger. The commission also acknowledged the “serious nature of the allegations.”

The ICC must rule on the merger by July.

(Source: Sun-Times Media Wire © Chicago Sun-Times 2015. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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