News From Terre Haute, Indiana

February 8, 2006

Pete Chalos: Diligent oversight of utilities an important mission

At the end of January, ExxonMobil Corp. revealed record-breaking profits, the highest quarterly profits ever reported by a public company in the history of America. Exxon’s annual profit was $36.13 billion. That’s a 42 percent rise since last year.

Exxon blames the skyrocketing prices of oil and gas on tensions in oil producing countries and the recent hurricanes. These excuses don’t seem to hold water in light of the fact that Exxon’s oil and gas production only fell 1 percent during the quarter. If you discount the effects of Hurricane Katrina and Hurricane Rita, production actually rose 2 percent in spite of the war in Iraq.

Senate Majority Leader Bill Frist, R-Tenn., recently called for a congressional investigation into profiteering. Frist said, “If there are those who abuse the free enterprise system to advantage themselves and their businesses at the expense of all Americans, they ought to be exposed, and they ought to be ashamed.”

While oil and utility companies are experiencing a windfall this quarter, companies like Ford Automotive and Kraft Foods are laying off workers by the thousands. The price of fuel, heating and cooling, and producing products derived from petroleum (including anything plastic, chemical solvents, etc.) has gone through the roof. Oil companies have made their record profits at the expense of other industries and at the expense of American workers. I agree that they should be ashamed.

Any company involved in producing plastics, packaging (CD cases, plastic bags, etc.) and shipping has been hit hard. This includes many of our Terre Haute companies. Bemis, the largest manufacturer of polyethylene film in the United States, and AET, the largest manufacturer of polypropylene film in the U.S., have felt the sting along with other local plastics manufacturers like Ampacet, Tredegar and Jadcore.

DADC, one of our largest employers, uses plastic in the production of compact discs and cases. The price of oil factors into shipping costs as well, affecting the page and a half of trucking firms in our local phone book. Terre Haute is certainly feeling the sting of excessive profiteering on the part of the gas and oil industry.

On a more personal level, the cost of fuel to the average working man who drives to work every morning and home every evening has become unbearable. On top of that, the price of heating or cooling your home with natural gas has just about doubled since last year. After Hurricane Katrina, the natural gas industry decided to use the same excuse the oil industry was using to take advantage of the opportunity to gouge the public.

To their credit, Indiana-based company Vectren has announced that it will lower its rates by 15 percent for the duration of this month. Rates will remain at a high point in history but any reduction is good news. What we really need is some action taken to enforce of the rules and regulations of the ratepayers’ Regulatory Commission.

Natural gas companies shouldn’t have been permitted to raise their rates based on expectations of a harsh winter or projected reductions in production due to Hurricane Katrina in the first place. They make projections that rarely come true, but they keep the money from the rate increases anyway. Our state and local officials should be asking for hearings (to be conducted before the rate increase) when utilities start asking for more money. Utility companies should be forced to prove there is a valid reason for the rate hikes instead of relying on blind speculation.

It wasn’t too long ago that the City of Terre Haute won the largest settlement in Indiana history against Public Service Indiana (PSI). The recovery of $257 million, which was given back to the customers, was the result of actions taken by the mayor’s office and the City Council. Attorneys Bob Hellmann and Max Goodwin represented Terre Haute. Jack Wickes represented industry within the PSI service area. I was the mayor of Terre Haute at the time. Along with Wickes, I am still a member of the Indiana Utility Rate Payer Trust, an organization which assists those who qualify for grants to cover expenses in bringing action against unreasonable or illegal utility practices.

I’d like to urge officeholders at the city and state levels to once again take a stand on behalf of local ratepayers. When utility rates are left unchecked, business and industry suffer as do each of our private citizens. The effort to diligently regulate utilities should be continuous. Such efforts have made a difference in the past and can make a difference today.

Pete Chalos, a longtime teacher, coach and public servant in Vigo County, was mayor of Terre Haute for 16 years. Send e-mail to