Illinois regulators on Wednesday approved Wisconsin Energy’s $5.7 billion acquisition of Integrys Energy, the parent of Peoples Gas.
The vote was 4-1, with Commissioner Miguel Del Valle voting against.
The approval by the Illinois Commerce Commission is conditional on more than 40 items being met, including a two-year rate freeze for consumers, according to Commission Chairman Brien Sheahan.
The ICC also must continue to oversee Peoples’ troubled multibillion-dollar program to replace about 2,000 miles of aging pipes under Chicago streets. The commission issued a report last month that pointed to major delays and budget overruns that could lead to significantly higher bills for customers.
Del Valle said he voted against the transaction because “the order leans so much on conditioned future commitments.”
He also said the merger application continues the “tradition of large utility holding companies asserting that they are above examination…”
The commission, which regulates utilities in Illinois, ordered the audit of Peoples in 2013 because of concerns over the slow progress on replacing pipes. The audit disclosed costs “have increased dramatically” from an estimated $2.6 billion in 2009 to about $4.5 billion in 2012. Costs could be even higher, according to Liberty Consulting, the firm that conducted the $1.3 million audit.
The program was scheduled to be completed by 2030, which would have required Peoples to replace about 100 miles of pipe annually, according to the audit. But the audit found the program had fallen behind by about a year.
Included among the conditions of the approval is the requirement that Wisconsin Energy implement all of the recommendations of the audit and provide a transition plan for the replacement program.
After the vote, a spokeswoman for Peoples Gas said in a statement that the company will continue to work with the ICC and Liberty Consulting to achieve the project’s objectives and that it is “committed to delivering safe, reliable service to our customers by continuously maintaining and improving our system.”
Peoples and its sibling North Shore are required to retain 2,026 full-time equivalent employees for at least two years under the approval. Existing labor agreements are to be honored and the gas companies are to contribute $5 million of shareholder money over the next five years to Peoples’ “Share the Warmth” gas assistance fund for low-income consumers.
Wisconsin, Michigan and Minnesota regulators have already approved the deal. The Illinois approval is subject to the receipt of a final written order, which is expected shortly, according to Wisconsin Energy officials.
A spokeswoman for Attorney General Lisa Madigan, who intervened on behalf of consumers after allegations were made that said in a statement that the vote was a “one-sided victory” for company executives, and added that the office will continue to monitor the transition “very closely.”
The Citizens Utility Board said in a statement that it wanted to see stronger pro-consumer conditions attached to the merger, but that it looks forward to “working with the ICC and fellow consumer advocates to hold Wisconsin Energy accountable and ensure that Illinois ratepayers won’t be on the financial hook.”
The commission is also investigating allegations that the audit was undermined by Integrys and Wisconsin Energy and that former members of management have benefited from outside contracts on the project. Results of that investigation were not on Wednesday’s agenda.
