Anonymous Letters Put UtiliCorp in Hot Water

Investigations in several states are getting under way into alleged illegal 
profit-taking by UtiliCorp United in Missouri, Michigan, Nebraska, Minnesota 
and Iowa. An anonymous letter from someone who claimed to be a current 
employee for UtiliCorp was sent to state regulators alleging the company's 
Gas Supply Service Department (GSS) took part in improper actions in 
reselling natural gas to customers in these states. 

"Personnel are paid bonuses based on the value that can be extracted from 
managing the assets paid for by the Missouri Public Service (MPS) 
ratepayers," the letter said. The anonymous author said that value is 
extracted in numerous ways that are undetectable to staff audit efforts. One 
method included in the letter was for UtiliCorp employees to sell a first of 
the month "put" to suppliers, invoicing the put premium on a separate invoice 
that would never be included in audited documentation. If prices drop, the 
supplier puts first of the month gas to MPS. 

Another scheme alleged in the letter includes capacity releases. "Operations 
personnel extract one-to-two cents per release by doing buy-sells with MPS 
capacity, instead of doing a posted release," said the letter. "They look at 
the lowest credit amount possible to report, instead of maximizing the 
capacity release credit." The anonymous author speculated that these actions 
are taken to reach the unit's lofty profit goal of $10 million. "Due to the 
emphasis on earnings, GSS's top priority is earnings, not providing 
efficient, reliable, economic gas supplies," the author concluded. 

Jerry Cosley, a UtiliCorp United spokesperson said, "We can say without 
qualification, that in no way would we approve of any improper behavior or 
business practice, so we are conducting our own review." 

Missouri appears to be the first state out of the gate on the investigation 
trail as the staff of the Missouri Public Service Commission has recommended 
an investigation be conducted into the allegations. An MPS representative 
said that UtiliCorp denied the allegations of impropriety, but supports the 
staff's request to open an investigation. 

Iowa's Consumer Advocate is investigating the UtiliCorp charges in that 
state, said Chuck Seel, a spokesman for the Iowa Utilities Board. Seel said 
the Iowa and Minnesota letters, and the Michigan and Missouri letters, 
appeared to be similar to one another. He added that an observer from the IUB 
and a representative of the Consumer Advocate will attend a meeting next week 
with UtiliCorp to discuss the situation. 

Cosley said UtiliCorp intends to conduct its own internal review, and would 
stay in touch with all of the affected regulatory commissions and report its 
findings to them. 


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