                            Illinois Official Reports

                                    Appellate Court



        Citizens Utility Board v. Illinois Commerce Comm’n, 2015 IL App (2d) 130817



Appellate Court        CITIZENS UTILITY BOARD, Petitioner, v. ILLINOIS
Caption                COMMERCE COMMISSION; THE PEOPLE ex rel. THE
                       ATTORNEY GENERAL OF THE STATE OF ILLINOIS;
                       ENERGY-KOCH TRADING, L.P.; NORTHERN ILLINOIS GAS
                       COMPANY, d/b/a Nicor Gas Company; INTERSTATE GAS
                       SUPPLY ASSOCIATION (ConEd Solutions Direct Energy Services,
                       LLC, Exelon Energy Company, GDF SUEZ Energy Resources NA,
                       Inc., Glexa Energy, Green Mountain Energy Company, Hess
                       Corporation, Integrys Energy Services, Inc., Just Energy, Liberty
                       Power, RRI Energy, and Sempra Energy Solutions LLC),
                       Respondents.


District & No.         Second District
                       Docket No. 2-13-0817

Filed                  May 14, 2015

Decision Under         Petition for review of order of Illinois Commerce Commission, Nos.
Review                 01-0705, 02-0067, 02-0725 cons.

Judgment               Affirmed.


Counsel on             Julie L. Soderna and Christie R. Hicks, both of Citizens Utility Board,
Appeal                 of Chicago, for petitioner.

                       James E. Weging, of Illinois Commerce Commission, of Chicago, for
                       respondent Illinois Commerce Commission.

                       John E. Rooney, John P. Ratnaswamy, and Anne W. Mitchell, all of
                       Rooney Rippie & Ratnaswamy LLP, of Chicago, for respondent
                       Northern Illinois Gas Company.
     Panel                    PRESIDING JUSTICE SCHOSTOK delivered the judgment of the
                              court, with opinion.
                              Justices Hutchinson and Burke concurred in the judgment and
                              opinion.




                                               OPINION

¶1          On June 5, 2013, following review of an alternative rate regulation program pursuant to
       section 9-244(c) of the Public Utilities Act (Act) (220 ILCS 5/9-244(c) (West 2012)), the
       Illinois Commerce Commission (Commission) ordered Northern Illinois Gas Company, d/b/a
       Nicor Gas Company (Nicor), to refund $72,149,519 to its customers based on certain
       improprieties that occurred during the pendency of the program. On appeal, the Citizens Utility
       Board (CUB) argues that the Commission applied an improper standard of proof and that
       Nicor customers are entitled to an additional $155 million in damages based on alleged
       manipulation of storage withdrawals in 2001. We affirm the Commission’s decision.

¶2                                          BACKGROUND
¶3         On March 1, 1999, Nicor filed a verified petition seeking the Commission’s approval,
       under section 9-244 of the Act (220 ILCS 5/9-244 (West 1998)), of an alternative rate
       regulation program, which it termed the “Gas Cost Performance Program” (GCPP). The
       Commission approved the GCPP with modifications in an order entered on November 23,
       1999. The GCPP was in effect from January 1, 2000, until December 31, 2002.
¶4         Under the GCPP, each calendar year, Nicor’s total actual annual purchased gas costs were
       compared with an annual gas cost “benchmark,” which was meant to approximate the gas costs
       that Nicor would have incurred under traditional rate regulation. The benchmark reflected the
       market price for the gas when it was sold to customers. It incorporated the market index cost of
       gas less certain adjustments, to reflect other factors impacting the costs Nicor incurred to
       provide gas to its customers. One such adjustment was a storage credit adjustment (SCA),
       which accounted for the seasonal price differential between lower-cost summer months and
       higher-cost winter periods. The withdrawal percentages under the SCA were based on Nicor’s
       historic storage withdrawal activity during the years 1994-98. By withdrawing less than it had
       historically, Nicor could raise the benchmark. By withdrawing more than it had historically,
       Nicor could lower the benchmark.
¶5         Under the GCPP, savings or losses experienced by Nicor based on the actual cost of gas in
       comparison to the benchmark were to be shared on a 50-50 basis between Nicor and its
       customers. If the benchmark exceeded actual gas costs over a given year, Nicor and its
       customers each received 50% of the difference. If the benchmark was less than the actual gas
       costs, Nicor and its customers each had to pay 50% of the difference.
¶6         Natural gas utility companies typically withdrew gas from storage during the winter when
       the demand and cost for gas were higher, and replenished the storage supply during the
       summer when gas prices generally declined. Nicor had significant underground storage of
       natural gas. Nicor used a last-in, first-out (LIFO) method of accounting for gas storage

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       inventory. Under this method, the inventory was considered to exist in layers, with each layer
       priced at its cost in the year it was added to storage. When gas was withdrawn from storage, the
       most recent layer added was considered the layer withdrawn for accounting purposes. Whether
       a layer was added was always determined at the end of the year, by considering overall storage
       additions versus withdrawals. If more gas was added than withdrawn from storage, a LIFO
       storage layer was created. Over time, Nicor had accumulated large stores of low-cost LIFO gas
       on its books, which were estimated to be worth several hundred million dollars.
¶7         Before applying for the GCPP, Nicor created an “inventory value team” to investigate how
       Nicor could benefit from the low-cost gas in storage. Under traditional rate regulation, referred
       to as purchased gas adjustment (PGA) regulation, ratepayers would have received 100% of the
       benefit of the low-cost LIFO gas. In the middle of 1998, the inventory value team issued a
       report recommending that Nicor pursue a performance-based regulatory program (PBR), such
       as the GCPP, which would allow Nicor to share in the benefit of the low-cost LIFO gas. In the
       Commission’s proceedings that resulted in the approval of the GCPP, Nicor failed to reveal
       this information when it was questioned as to the extent to which it would profit under the
       GCPP.
¶8         On January 24, 2002, the Commission entered an initiating order (Docket No. 02-0067) to
       review the GCPP, pursuant to section 9-244(c) of the Act, which required that the Commission
       review any approved program two years after its implementation to determine whether it was
       meeting its objective. On June 10, 2002, following the submission of testimony and an
       evidentiary hearing, the record was marked “Heard and Taken.” CUB then received an
       anonymous “whistleblower” fax containing allegations about the operation of the GCPP.
       Thereafter, Nicor and all other parties agreed to reopen the case and resume discovery. On July
       16, 2002, the Commission entered an interim order allowing discovery to proceed.
¶9         In response to the whistleblower fax, Nicor formed a special committee to investigate its
       GCPP activities. The committee hired Scott R. Lassar of Sidley, Austin, Brown and Wood
       (Sidley) to investigate Nicor’s GCPP activities. On October 28, 2002, Sidley filed with the
       committee a report, authored by Lassar (the Lassar report), presenting its findings and
       conclusions. The Lassar report concluded that Nicor’s GCPP activities had adverse
       consequences for customers and it recommended certain adjustments to eliminate those
       consequences. In the report, Lassar noted that Nicor’s 2001 storage withdrawals were well
       below historic estimates. However, he “did not find evidence indicating that this was because
       of improper attempts to manipulate the storage cycle.” He noted that December 2000 was
       exceedingly cold. In January 2001, based upon Nicor’s concerns that it would be another
       exceedingly cold month, Nicor obligated itself to buy large quantities of gas at historically high
       prices so that it would ensure service to customers for the rest of the winter. However, January
       2001 was warm. Lassar also noted that due to high gas prices in the fall/winter of 2001, when
       Nicor would normally have sold its storage gas to ratepayers, it instead provided cheaper,
       flowing gas to customers.
¶ 10       On December 9, 2002, the parties filed a joint motion to reopen the record in docket No.
       02-0067 and expand the scope of the proceeding. On December 17, 2002, in a second interim
       order, the Commission reopened the record and decided that additional issues related to the
       PGA regulation for the years 1999-2000 would be reviewed based on new and relevant
       information. The Commission also declared that “this proceeding is the appropriate formal
       mechanism to consider the totality of issues currently before this Commission as a result of the

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       operation of the GCPP program, including the transactions occurring in 1999.” The
       Commission further stated that it was reopening the record to consider:
                “all issues relating to the operation of the [GCPP] Nicor Gas implemented *** in
                accordance with the Commission’s order entered November 23, 1999, in Docket
                99-0127, and all issues relating to any refunds that may be owing to Nicor customers
                *** as a result of the operation of the [GCPP] in 1999, 2000, 2001, and 2002, and for
                ordering such other and further relief as deemed equitable and just.”
¶ 11       The Commission was required to conduct annual hearings (“reconciliation proceedings”)
       to (1) examine whether Nicor’s rates reflected the costs of purchased gas, in order to determine
       whether such purchases were prudent, and (2) reconcile any amounts collected with the actual
       costs of gas. 220 ILCS 5/9-220(a) (West 2002). The Commission consolidated docket No.
       02-0067 with Nicor’s then-pending reconciliation proceedings of its actual gas costs for the
       years ending December 31, 2001 (docket No. 01-0705), and December 31, 2002 (docket No.
       02-0725).
¶ 12       Thereafter, evidentiary hearings in this case were suspended pending litigation in the
       circuit court of Cook County to obtain copies of materials related to the GCPP that were in the
       possession of a Texas-based entity. The materials were ultimately produced in December
       2006. Proceedings in this case then resumed.
¶ 13       Commencing in August 2009, CUB, the Illinois Attorney General (AG), the staff of the
       Commission (Staff), and Nicor each sponsored direct and surrebuttal testimony. Relevant to
       this appeal, Dr. Paul Carpenter, David Moes, and Christopher Gulick testified on behalf of
       Nicor. David Effron testified on behalf of the AG. James Mierzwa testified on behalf of CUB.
       CUB identified 11 different issues that required refunds to correct Nicor’s inappropriate
       actions under the GCPP. The refunds were intended to adjust the benchmark to place
       customers in the position they would have been absent the improper activity. Of these 11
       issues, Staff witnesses provided essentially similar testimony as to 8. On February 16, 2012, on
       those eight issues, Staff and Nicor stipulated to an amount of refunds ($64 million) due to
       Nicor’s customers. On February 28 and 29, and March 1, 2012, evidentiary hearings were held
       before the Commission, at which the direct and surrebuttal testimony taken by the parties was
       admitted into evidence. The relevant testimony is as follows.

¶ 14                           Testimony of CUB Witness James Mierzwa
¶ 15       On August 14, 2009, Mierzwa testified that he was a principal and vice president of Exeter
       Associates, Inc., a company specializing in providing public-utility-related consulting
       services. He had worked at Exeter since 1990 and specialized in evaluating the gas purchasing
       practices and policies of natural gas utilities. Mierzwa testified that Nicor improperly
       manipulated the GCPP and its results. He opined that, under the GCPP, Nicor could lower or
       raise storage withdrawals to affect the benchmark. He opined that Nicor purposely reduced the
       storage withdrawal cycle in 2001 when it was not in the best interest of its customers.
¶ 16       As an example of how customers’ interests were not aligned with the GCPP, Mierzwa
       testified that in September 2001 the cost of gas in storage was $3.35 per dekatherm (Dth) and
       that the cost of flowing supplies in November and December 2001 was $2.77 and $3.14 per
       Dth, respectively. At the same time, the storage credit rate was about $2.85 per Dth. As such,
       the benchmark would be reduced by $2.85 for each Dth of gas withdrawn from storage. Under


                                                  -4-
       the GCPP, 50% of the reduction in the benchmark would have accrued to customers, which
       would have been $1.42 per Dth, which exceeded the savings estimated by Nicor of $0.40 per
       Dth (by purchasing flowing gas). Under these circumstances, customers would have been
       better off had Nicor continued to withdraw gas from storage. Based on the improper reduction
       in storage withdrawals in 2001, Mierzwa opined that ratepayers were entitled to a refund of
       $155.3 million.
¶ 17       On October 7, 2011, in surrebuttal, Mierzwa reiterated that Nicor was able to significantly
       manipulate its storage withdrawal activity and pointed out that withdrawals in 2001 were about
       half of the withdrawals in 2000. He did not believe that cold weather or a possible compromise
       to reliability could explain Nicor’s storage withdrawal decisions. Mierzwa opined that Nicor’s
       storage withdrawal decisions were influenced by a desire to beat the benchmark (by keeping
       monthly storage withdrawals as close as possible to the percentages set under the SCA
       component of the benchmark) and also to access low-cost LIFO gas in storage inventory. As
       compared to historical data, a chart showed, the monthly storage withdrawal in November
       2000 was unusually high and in the first three months of 2001 was unusually low.
¶ 18       Mierzwa further testified as to factors that affected Nicor’s gas purchasing decisions in
       November 2000. First, colder-than-normal temperatures increased gas sales by about 13% and
       gas prices became unusually high. Accordingly, Nicor increased storage withdrawal in
       November 2000 by 80% above planned withdrawals and the historical average level of
       withdrawals. In December 2000, severe cold weather once again increased sales above planned
       levels by about 25%. Additionally, gas prices continued to increase significantly, with an
       average daily price almost twice normal. Despite these issues, Nicor did not increase
       withdrawals in December as it had in November. Mierzwa believed that Nicor’s argument, that
       it had withdrawn so much extra gas from storage in November that it could not do so in
       December, was misleading and incomplete. Mierzwa opined that Nicor reduced contract
       storage injections in 2000 so that it could lower inventories as a means to access the low-cost
       LIFO layers. (Storage inventory consisted of both on-system storage and contract storage.)
       Mierzwa pointed out that contract storage inventory in October 2000 was half of its historical
       average level and that in December 2000 it was only 22% of its historical average. Mierzwa
       opined that, because Nicor failed to increase contract storage in the summer of 2000, inventory
       levels were depleted and ratepayers were adversely affected.
¶ 19       Mierzwa also noted that “Hub services” reduce the storage capacity available to ratepayers.
       Hub services include park and loan services. In a park transaction, a third party delivers gas to
       Nicor for storage and the gas is returned to that third party at a later date. A loan transaction is
       the opposite. Mierzwa testified that Nicor’s Hub services during the GCPP period affected the
       storage inventory levels and thus the amount of gas available to ratepayers during 2001.
       Specifically, in the summer of 2000, Nicor accepted and stored 13.7 billion cubic feet (Bcf) of
       gas for third parties. That gas was withdrawn and returned by mid-February 2001. That gas
       was thus unavailable to serve customers during the winter of 2000-01. In February and March
       2001, Nicor loaned 8.0 Bcf of gas to third parties, decreasing the storage withdrawals available
       to customers and thereby increasing the gas costs to customers (who had to purchase gas at
       much higher market prices).
¶ 20       Finally, Mierzwa opined that Nicor’s explanation that low storage withdrawals in January
       2001 were weather-related should be viewed with skepticism. In January 2003 more gas was
       withdrawn from storage despite the fact that December 2002 inventory levels were lower than

                                                    -5-
       December 2000 inventory levels. On cross-examination before the Commission on February
       28, 2012, Mierzwa admitted that he had never managed storage inventories for gas distribution
       utilities. He acknowledged that, if storage assets were mismanaged, there could be catastrophic
       results.

¶ 21                             Testimony of AG Witness David Effron
¶ 22       David Effron provided testimony on behalf of the AG. However, in its brief on appeal,
       CUB provides limited cites to Effron’s testimony in support of its arguments. As such, we have
       declined to include Effron’s testimony in its entirety. In sum, Effron agreed with Mierzwa that,
       in 2001, the deviation from the historical pattern of injections and withdrawals increased the
       costs of gas delivered to customers.

¶ 23               Testimony of Nicor Witnesses David Moes and Christopher Gulick
¶ 24        On April 29, 2011, David Moes and Christopher Gulick provided testimony on behalf of
       Nicor. Moes testified that he worked for Navigant Consulting, Inc. (NCI), as a managing
       director and had over 26 years’ experience as an accountant. He had 23 years’ experience in
       “developing and applying quantitative analyses of business operations, and presenting these
       analyses in litigated proceedings.” Gulick testified that he worked for Bates White, a
       specialized economic consulting firm with expertise related to energy. He had over 30 years’
       experience in the North American energy industry, with a primary focus on natural gas and oil.
       He had direct experience in natural gas supply management and operations, assessing natural
       gas markets and pricing, and storage valuation.
¶ 25        Moes and Gulick testified that Nicor’s storage activity was evaluated in two ways: (1) in
       light of the storage activity that occurred across the United States in 2001, and (2) in terms of
       what the increased withdrawals would have implied with regard to managing gas resources.
       Moes and Gulick concluded that Nicor’s 2001 storage withdrawals were consistent with the
       storage withdrawals seen across the country due to the warmer temperatures that year. As
       compared to natural gas inventories nationwide (based on data maintained by the United States
       Energy Information Administration (EIA) from 1997 to 2004), Nicor’s 2000 and 2001 storage
       inventories followed a pattern similar to the national pattern, strongly implying that Nicor’s
       storage withdrawals were not influenced by considerations related to the GCPP.
¶ 26        Moes and Gulick opined that, if Nicor had increased storage withdrawals in 2001 as
       asserted by Mierzwa, it would have driven inventory to extremely low levels, would have been
       deviating from its operating practices, and could have impacted operational safety.
       Additionally, the unusually low operating level could have compromised Nicor’s ability to
       meet customer demand. They opined that Mierzwa failed to consider operational realities or
       constraints.
¶ 27        Relying on data compiled by the Commission, Moes and Gulick concluded that, compared
       to other major natural gas utility companies in Illinois, Nicor’s average price of gas was the
       lowest among its peers from 1995 to 2004, except in 2001, when Nicor’s average gas price was
       still second lowest.
¶ 28        On December 20, 2011, in surrebuttal testimony, Moes and Gulick opined that Nicor’s
       effort to access low-cost LIFO layer gas was conducted through accounting mechanisms and
       was not related to storage withdrawal activity in 2000 and 2001. They pointed out that this was

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       consistent with the Lassar report, which concluded that the accounting treatment of prefill
       storage transactions was the mechanism used to access low-cost LIFO gas. Moes and Gulick
       noted that multiple regulators and auditors had scrutinized Nicor’s actions under the GCPP and
       that none of them disputed the Lassar report’s conclusion on this issue.
¶ 29       Moes and Gulick reiterated that Nicor’s 2000 and 2001 storage withdrawal activity was
       necessitated by weather, market conditions, and operational requirements and was not
       undertaken with a desire to manipulate the benchmark. The fact that Nicor customers enjoyed
       competitive rates during the GCPP demonstrated that Nicor was not mismanaging or
       “manipulating” storage withdrawals to its benefit and to the detriment of customers. Moes and
       Gulick did not agree with Mierzwa’s assessment of the effect of Hub services on storage
       inventory levels. Although Nicor might have had custody of third-party gas, it did not hold title
       to that gas. If Nicor wanted to purchase that gas, it likely would have paid the market price. As
       such, there was no economic difference between buying stored gas from third parties and
       purchasing flowing gas. On March 1, 2012, Moes and Gulick testified before the Commission
       consistently with their direct and surrebuttal testimony.

¶ 30                          Testimony of Nicor Witness Dr. Paul Carpenter
¶ 31       On April 29, 2011, Carpenter testified that he had a doctorate in applied economics, a
       master’s degree in management, and a bachelor’s degree in economics. He had 25 years’
       experience in research and consulting on the economics and regulation of the natural gas
       industry. He was asked by Nicor to evaluate Mierzwa’s testimony. Carpenter opined that
       Mierzwa’s evaluation was based on hindsight rather than on the market conditions that were
       known or anticipated by Nicor when its actions were taken.
¶ 32       In response to Mierzwa’s claim that had Nicor, in 2001, followed historical withdrawal
       activity it would have produced lower gas costs for customers, Carpenter opined that market
       conditions had changed significantly in 2001 and that it would be inappropriate to impose a
       historical standard retroactively. Data indicated that monthly gas prices, which were generally
       $2 to $3 per million British thermal unit (Mmbtu), reached $10.94 per Mmbtu in January 2001.
       This was a highly unusual and unexpected gas price spike. Such gas price fluctuations had not
       occurred during the years that were the basis for Mierzwa’s damages calculation related to the
       allegedly improper 2001 storage withdrawals. Carpenter opined that Mierzwa’s damages
       calculation was based almost entirely on this unexpected event. For example, of Mierzwa’s
       $155 million in damages, $142 million was derived from one month–January 2001.
¶ 33       Carpenter further testified that Mierzwa failed to consider market conditions and storage
       inventory. December 2000 was the second coldest December in Chicago since 1872. Carpenter
       pointed to an EIA report that found that, in the winter of 2000-01, frigid temperatures caused a
       surge in demand that led to soaring prices and a rapid drawdown of storage inventories. The
       EIA report also stated that “[r]ising prices at the beginning of the natural gas storage refill
       season in April 2000 resulted in lower levels of injections than normal and unusually low
       levels of natural gas in storage at the start of the 2000-2001 winter.” Carpenter testified that in
       November and December 2000 Nicor withdrew historically large volumes of gas from storage,
       which kept prices low in those months. As a result, Nicor’s storage inventory at the end of
       2000 was at its lowest year-end level since 1994. Carpenter opined that Nicor managed its
       January 2001 storage withdrawals to ensure that it had the ability to meet its winter reliability
       obligations–not to improve its performance under the GCPP. The more likely explanation for

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       Nicor’s January 2001 storage withdrawals was that the low inventory at the end of 2000
       restricted Nicor’s ability to withdraw at the same levels as it had in the past.
¶ 34        On December 20, 2011, in surrebuttal, Carpenter testified that the inventory level at the end
       of October 2000 was consistent with historical inventories and, thus, there was no support for
       the assertion that Nicor started the winter withdrawal season with an unreasonably low level of
       gas in storage so as to position itself to access LIFO layers. Further, Carpenter testified that
       Nicor’s low storage inventory level at the end of 2000 was consistent with what was happening
       to gas storage inventories across the country at that time. This suggested that Nicor acted
       properly and that the incentives in its GCPP were not out of line with the incentives faced by
       users of gas storage services across the country.
¶ 35        According to Carpenter, the evidence indicated that Nicor’s strategy to access low-cost
       LIFO gas was through the use of “pre-fill” storage deals. He noted that this conclusion was
       supported by the Lassar report. Carpenter testified that the GCPP was designed such that all
       storage withdrawal activity impacted the benchmark, but this did not mean that managing the
       withdrawal activity was “manipulative.”
¶ 36        Finally, Carpenter responded to Mierzwa’s claim that January 2003 withdrawals were
       higher than January 2001 even though year-end inventory in 2002 was lower than in 2001.
       Carpenter testified that this example highlighted the danger of using historical data to support
       an argument about what “should have been done.” Carpenter explained that, while total net
       withdrawals in January through April 2001 and 2003 were 30.3 Bcf and 35.9 Bcf, respectively,
       Mierzwa’s 2001 damages calculation assumed that withdrawals should have been 73.8 Bcf in
       January through April 2001–more than double the withdrawals in Mierzwa’s reference year of
       2003. Moreover, if Mierzwa’s damages calculation had adopted the entire 2003 injection and
       withdrawal profile, his calculation would have been only $17 million instead of $155 million.
¶ 37        On March 1, 2012, before the Commission, Carpenter acknowledged that the contract
       storage inventory at the end of October 2000 was 45% of the historical four-year average.
       Nonetheless, Carpenter testified that this was not meaningful, as total storage inventory was
       still in line with historical data.

¶ 38                                  Commission’s Determination
¶ 39       On February 16, 2012, Nicor and Staff entered a stipulation forming the basis for refunds
       from Nicor to its customers in the amount of $64 million. On June 5, 2013, the Commission
       entered its written order acknowledging the stipulation of $64 million. However, there
       remained requested refunds to which Nicor did not stipulate. On one of those issues (termed
       “Delivered Storage Service Withdrawals”), the Commission ordered an additional $8 million
       in damages, bringing the total damages to $72 million.
¶ 40       Relevant to the claim on appeal in this case, the Commission denied CUB’s and the AG’s
       damages requests as to allegedly improper gas storage withdrawals in 2000 and 2001. The
       Commission concluded that, “[w]hile the intentions of [Nicor] during the implementation of
       this program are certainly subject to question, there are no conclusive facts in the record to
       support the measures or refunds requested by the AG and CUB.” Additionally, the
       Commission found that “[o]n the issue of storage manipulation, *** no definitive evidence
       was presented to show that this component of the GCPP was not operated as intended.” The
       Commission noted that: (1) Nicor followed the withdrawal percentages in the order approving


                                                   -8-
       the GCPP; (2) there was no evidence that Nicor should have been able to foresee the
       colder-than-normal weather and spike in gas prices in November and December 2001; and (3)
       in this type of analysis, it was necessary to look at the program as a whole, rather than at a
       limited period, as the latter might present an inaccurate picture of the entirety of the program.
       CUB filed a timely notice of appeal.

¶ 41                                               ANALYSIS
¶ 42        CUB’s first contention on appeal is that the Commission applied a much higher standard of
       proof than required under the Act, which rendered the Commission’s decision arbitrary and
       unlawful. Specifically, CUB points to the language in the Commission’s order that “no
       conclusive facts” and “no definitive evidence” supported CUB’s request for damages related
       to improper storage withdrawals. CUB argues that these phrases indicate that the Commission
       applied a “clear and convincing” standard of proof. CUB contends that section 10-15 of the
       Illinois Administrative Procedure Act (5 ILCS 100/10-15 (West 2012)) defines the standard of
       proof to be applied to hearings under the Act. Specifically, section 10-15 provides that
       “[u]nless otherwise provided by law or stated in the agency’s rules, the standard of proof in any
       contested case *** shall be the preponderance of the evidence.” Id. CUB argues that the Act
       does not provide for any other standard of proof and, thus, the preponderance-of-the-evidence
       standard should have been applied, not a clear-and-convincing standard.
¶ 43        In response, the Commission and Nicor do not dispute that preponderance-of-the-evidence
       was the proper standard to be applied. The Commission does, however, contend that CUB
       forfeited this argument because the issue was not raised in CUB’s application for rehearing
       before the Commission.
¶ 44        Pursuant to section 200.880(a) of the rules of the Illinois Commerce Commission (83 Ill.
       Adm. Code 200.880(a) (2000)), a party may file an application for rehearing from any order on
       the merits made by the Commission. The Commission’s rules further provide that an appeal
       may not be taken unless an application for rehearing was filed and disposed of by the
       Commission. 83 Ill. Adm. Code 200.880(d) (2000). The Act expressly limits the scope of a
       party’s appeal to those issues raised in the application for rehearing before the Commission.
       220 ILCS 5/10-113(a) (West 2012) (“No person or corporation in any appeal shall urge or rely
       upon any grounds not set forth in such application for a rehearing before the Commission.”);
       People ex rel. Madigan v. Illinois Commerce Comm’n, 2015 IL 116005, ¶ 46 (appellate review
       of an issue is forfeited if a party fails to strictly comply with section 10-113(a) of the Act). The
       allegations in an application for rehearing must be stated in unequivocal terms and be
       sufficiently specific to apprise the Commission and the opposing parties of the actual points
       relied upon. City of Granite City v. Illinois Commerce Comm’n, 407 Ill. 245, 250 (1950). The
       purpose of the application is to point out mistakes of fact or law so that the Commission will
       have an opportunity to correct any errors and, perhaps, avoid the need for judicial review.
       Meinhardt Cartage Co. v. Illinois Commerce Comm’n, 15 Ill. 2d 546, 550-51 (1959).
¶ 45        In the present case, CUB argues that it did raise the issue of the improper standard of proof
       in its application for rehearing. CUB points out that in the application it noted that
       preponderance-of-the-evidence was the proper standard of proof and further argued that, “[b]y
       concluding that substantial evidence in the record supports the issue in the Settlement, but
       simultaneously concluding that there is not sufficient evidence to support CUB’s and the AG’s
       2001 storage manipulation claims, the Commission is acting arbitrarily and capriciously.”

                                                    -9-
       CUB argues that the foregoing challenged the standard of proof applied by the Commission
       and put the Commission on notice of such a claim. We disagree. A general allegation about the
       proper standard of proof and a general allegation that the Commission was acting arbitrarily
       and capriciously were not sufficient to put the Commission on notice of the contention now
       raised on appeal–that it had applied an improper standard of proof in making its determination.
       Granite City, 407 Ill. at 250 (general allegation was not sufficient to preserve an issue for
       appeal); City of Champaign v. Illinois Commerce Comm’n, 141 Ill. App. 3d 457, 459 (1986)
       (issue forfeited for review where it was not properly raised “in unequivocal terms” in
       application for rehearing before the Commission). In failing to raise the present issue in
       unequivocal terms in the application for rehearing, CUB foreclosed the Commission’s
       opportunity to either modify the language in its order or otherwise reconsider its determination
       in light of such a claim. Accordingly, CUB has forfeited this issue for purposes of review.
       People ex rel. Madigan, 2015 IL 116005, ¶ 46.
¶ 46       CUB’s second contention on appeal is that the Commission’s determination, that Nicor had
       not improperly manipulated storage withdrawals, was not supported by substantial evidence.
       “Because the Commission is an administrative agency, we will reverse its orders only if[:] the
       Commission’s findings are not supported by substantial evidence based on the record; the
       Commission acted outside the scope of its statutory authority; the Commission issued findings
       in violation of the State or Federal Constitution or law; or the proceedings or the manner in
       which the Commission reached its findings violate[d] the State or Federal Constitution or laws,
       to the prejudice of the appellant.” Citizens Utility Board v. Illinois Commerce Comm’n, 166 Ill.
       2d 111, 120-21 (1995) (citing 220 ILCS 5/10-201(e)(iv)(A) to (e)(iv)(D) (West 1992)). In this
       case, CUB argues only that the Commission’s order was not supported by substantial evidence.
       Substantial evidence is evidence that one would generally accept as sufficient to support a
       particular conclusion. Citizens Utility Board v. Illinois Commerce Comm’n, 291 Ill. App. 3d
       300, 304 (1997). Such evidence is more than a mere scintilla but may be less than a
       preponderance of the evidence. Id.
¶ 47       On appeal from an order of the Commission, the appellant bears the burden of proving that
       it was not supported by substantial evidence. 220 ILCS 5/10-201(d), (e)(iv) (West 2012).
       Merely showing that the evidence presented may support a different conclusion is not
       sufficient; rather, the appellant must show that the opposite conclusion is clearly evident.
       Continental Mobile Telephone Co. v. Illinois Commerce Comm’n, 269 Ill. App. 3d 161, 171
       (1994). A reviewing court will not reevaluate the credibility or weight of the evidence or
       substitute its judgment for that of the Commission unless the Commission’s judgment was
       clearly against the manifest weight of the evidence. People ex rel. Madigan v. Illinois
       Commerce Comm’n, 2011 IL App (1st) 100654, ¶ 70.
¶ 48       In the present case, we cannot say that the Commission’s decision was not supported by
       substantial evidence. Moes and Gulick opined that Nicor’s 2000-01 storage withdrawal
       activity was necessitated by weather and market conditions. They testified that Nicor’s 2001
       storage withdrawals and inventories were consistent with patterns nationwide, indicating that
       the withdrawal activity was not influenced by considerations related to the GCPP. They also
       testified that it would have been unreasonable to have increased the storage withdrawals in
       2001 as suggested by Mierzwa, because it would have been inconsistent with Nicor’s
       operating practices and could have impacted Nicor’s ability to meet customer demand. Moes
       and Gulick opined that access to low-cost LIFO gas was accomplished through storage prefills


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       and was not related to withdrawal activity. Further, they noted that Nicor’s customers paid
       competitive rates while the GCPP was in place, which demonstrated that Nicor was not
       manipulating storage withdrawals to the detriment of its customers.
¶ 49       Further, Carpenter testified that Mierzwa’s evaluation as to 2001 storage withdrawals was
       based on hindsight rather than the market conditions known or anticipated when the actions
       were taken. Carpenter testified that market conditions had changed significantly in 2001 and
       that therefore it was inappropriate to compare 2001 to historical standards. For example, there
       was a highly unusual and unprecedented gas price spike in January 2001 and such gas price
       fluctuations had not occurred during the years that were the basis for CUB’s 2001 storage
       withdrawal damages calculations. In addition, due to extreme cold temperatures in November
       and December 2000, Nicor withdrew more gas from storage during those months than it had
       historically. The resultant low inventory level in January 2001 restricted Nicor’s ability to
       withdraw stored gas at the same levels it had in the past. Carpenter cited an EIA report, which
       stated that the cold temperatures in the final two months of 2000 resulted in soaring prices and
       a rapid drawdown of storage inventory.
¶ 50       Carpenter further testified that total storage inventory levels at the end of October 2000
       were consistent with historical inventories and, therefore, there was no support for the
       assertion that Nicor started the winter withdrawal season with an unreasonably low level of
       inventory so as to position itself to access low-cost LIFO gas. Carpenter noted that Nicor’s
       withdrawal activity in 2001 mirrored nationwide trends, which showed that Nicor had acted
       properly. Finally, Carpenter testified that, as stated in the Lassar report, an accounting method
       referred to as storage prefills was Nicor’s strategy to access LIFO gas. As such, the testimony
       of Moes, Gulick, and Carpenter provided substantial evidence to support the Commission’s
       determination.
¶ 51       CUB argues that in November 2000 Nicor increased storage withdrawals well beyond
       what was necessary and, during 2001, lowered the storage cycle under planned levels. CUB
       argues that these actions were taken to manipulate the benchmark and insulate Nicor against
       loss. While Mierzwa’s testimony supported this proposition, the testimony of Carpenter,
       Moes, and Gulick supported a determination to the contrary. All three testified that the
       withdrawals in late 2000 and early 2001 were necessitated by the weather and market
       conditions and were not intended to manipulate the benchmark. It is well settled that the
       credibility of expert witnesses and the weight to be given their testimony are matters for the
       Commission as the finder of fact. Apple Canyon Lake Property Owners’ Ass’n v. Illinois
       Commerce Comm’n, 2013 IL App (3d) 100832, ¶ 70.
¶ 52       CUB further argues that the Commission ignored the fact that, as compared to January
       2001, Nicor withdrew more gas from storage in January 2003, even though the storage
       inventory was lower at the end of December 2002 as compared to December 2000. However,
       Carpenter criticized CUB’s position for failing to consider the conditions known to Nicor
       when it made its withdrawal decisions in 2000 and 2001. Carpenter further testified that this
       type of comparison was inappropriate. Carpenter testified that, while total net withdrawals in
       January through April 2001 and 2003 were 30.3 Bcf and 35.9 Bcf, respectively, Mierzwa’s
       2001 damages calculation assumed that withdrawals should have been 73.8 Bcf in January
       through April 2001–more than double the withdrawals in Mierzwa’s reference year of 2003.
       Moes and Gulick opined that Mierzwa’s suggested 2001 withdrawals would have driven
       inventories to extremely low levels, would have been inconsistent with Nicor’s operating

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       practices, and would have caused risk to both safety and reliability. Carpenter opined that
       market conditions had changed significantly in 2001 and that it was inappropriate to impose a
       historical standard retroactively. We cannot say that it was improper for the Commission to
       credit the testimony of Nicor’s witnesses on this issue over that of Mierzwa. Id.
¶ 53       CUB next argues that the Commission ignored evidence that Nicor significantly reduced
       contract storage purchases to access additional LIFO layers. At the end of October 2000,
       contract storage inventory stood at 14.3 Bcf, which was 17.5 Bcf below the historical average
       of 31.8 Bcf. At the end of December 2000, Nicor’s contract storage inventory was 5.9 Bcf, or
       20.2 Bcf below the historical average inventory level of 26.1 Bcf. Mierzwa testified that,
       because Nicor failed to fill contract storage in the summer of 2000, inventory levels were
       depleted and customers were adversely affected. However, though Carpenter acknowledged
       that he did not know why the contract storage levels were what they were, he testified that
       contract storage levels did not matter, because Nicor’s total inventory was still in line with
       historical averages. He opined that there were reasonable market-based justifications for
       Nicor’s 2000 and 2001 storage activity. Moreover, Nicor’s witnesses testified that Nicor did
       not have to manipulate storage withdrawals to take advantage of the low-cost LIFO inventory.
¶ 54       CUB also argues that Nicor’s provision of “Hub services” reduced storage inventory
       available for ratepayers. This assertion was supported by Mierzwa’s testimony that during the
       summer of 2000 Nicor accepted into storage 13.7 Bcf of gas from third parties and withdrew
       and returned that gas to the third parties by February 2001. Mierzwa also testified that, during
       February and March 2001, Nicor loaned eight Bcf of gas to third parties. CUB’s position is that
       this gas could have been used to serve customers. However, Moes and Gulick did not agree
       with this assessment and testified that the park and loan transactions did not affect the price of
       gas for customers. Moes and Gulick explained that, although Nicor might have had custody of
       third-party gas, it did not own that gas and would have had to pay market prices had it
       delivered that gas to customers. Moreover, Nicor’s experts agreed that Nicor’s storage
       withdrawal activity was reasonable given the weather and market conditions at the time.
       Again, we cannot say that it was improper for the Commission to credit the testimony of
       Nicor’s witnesses on this issue over that of Mierzwa. Id.
¶ 55       Finally, CUB challenges the Commission’s decision to look at the GCPP program as a
       whole (2000 through 2002), and not just at a limited period (2001). Specifically, in denying
       CUB’s claim related to improper storage withdrawals, the Commission stated that it was
       “necessary to look at the program as a whole and not just [at] a limited period that may present
       an unrealistic picture of the entirety of the program.” CUB asserts that it was seeking an
       adjustment only for 2001 because that was the only year during which Nicor inappropriately
       suppressed storage withdrawals. Nonetheless, the Commission’s statement that it was looking
       at the entirety of the GCPP program is no basis on which to reverse the Commission’s
       decision. Archer-Daniels-Midland Co. v. Illinois Commerce Comm’n, 184 Ill. 2d 391, 397
       (1998) (“the Commission is entitled to great deference because it is an administrative body
       possessing expertise in the field of public utilities”); State Public Utilities Comm’n ex rel. City
       of Springfield v. Springfield Gas & Electric Co., 291 Ill. 209, 216 (1919) (“[a]ll doubts as to the
       propriety of means or methods used in the exercise of a power clearly conferred should be
       resolved in favor of the action of the commissioners in the interest of the administration of the
       law”). The parties agreed that the scope of the proceedings below would encompass all issues
       relating to any refunds that might be owing to Nicor customers during the years 1999 through


                                                   - 12 -
       2002. In addition, the evidence provided by both parties acknowledged that 2001 inventory
       withdrawals were affected by actions taken and inventory levels in 2000. Moreover, regardless
       of the Commission’s review of the program overall, there was substantial evidence to support
       its finding that there was no improper storage manipulation in 2001.

¶ 56                                         CONCLUSION
¶ 57      For the reasons stated, the order of the Illinois Commerce Commission is affirmed.

¶ 58      Affirmed.




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