Nicor consumers may see no changes for now

Nicor Gas customers around the suburbs may not see much change, at least initially, with the acquisition of the Naperville-based natural gas utility.

But just about anything can happen later, including rate changes.

Consumer advocates and experts agreed Tuesday that the newly formed company will have to follow the same legal procedures and state approval process when seeking any rate increases.

“There's always a concern that a sale like this will lead to a downturn in service and an upturn in rates,” said Jim Chilsen, spokesman for Citizens Utility Board, a Chicago-based consumer watchdog. “But CUB will review the deal to see if there are any red flags.”

Nicor announced Tuesday that it was being acquired by Atlanta-based AGL Resources in a $2.4 billion deal, making it one of the largest natural gas distributors in the country. Nicor Gas has about 2.2 million customers around Chicago, but not in the city; while AGL has about 2.3 million customers among six utilities.

The merger is expected to be completed by late 2011 and Naperville will become an expanded gas distribution headquarters. The corporate headquarters will be all based in Atlanta.

Executives at the companies vowed to bring only great service to consumers, but CUB said it's not holding its breath, considering its many battles with the utility on rate cases before the Illinois Commerce Commission.

Still, Nicor vows a seamless transition.

“I'm delighted to be able to assure Nicor's 2.2 million natural gas utility customers that they can continue to rely on the same local gas company with a well-deserved reputation for providing safe, reliable, cost-effective service, and the same people whom they've come to know and trust,” Nicor CEO and President Russ M. Strobel said in a statement. Strobel will retire and leave after next year.

Nicor spokeswoman Annette Martinez said that “low rates are expected to continue.”

While it's too early to say what will happen to the work force, Nicor will need to merge its 3,900 employees, including 2,200 for the gas utility, with AGL's 2,400 workers. AGL has already agreed to honor Nicor's collective bargaining agreement.

“AGL has committed to maintaining Nicor Gas job levels across our service territory for at least three years and they will also continue Nicor's strong tradition of contributing to our communities and philanthropic support for at least five years,” said Martinez.

Analysts speculated that the ranks of top executives and managers likely will be thinned due to duplications. Also, Nicor's unregulated businesses including a container shipping business and several gas storage, trading and billing operations could see more cuts compared to the regulated utility, said Dave Parker, senior utility analyst with Robert W. Baird & Co.

“They're both pretty lean machines already,” said Parker.