(08/27/2007)
West Virginia's Public Service Commission has changed its mind about auditing natural gas giant Dominion Hope.

The PSC has blocked a management audit that would have examined fraud allegations against the company.

The commission announced the investigative audit in May after former Dominion Hope executive Paul Kroll charged that the gas utility has manipulated regulators and cheated ratepayers in order to inflate profits.

The commission issued a new order calling off the audit, according to Ken Ward, Jr., a reporter for the Charleston Gazette.

The order contradicts its own staff experts' recommendations and the recommendations of the PSC's Consumer Advocate Division.

Instead, the order says, there will be hearings in three weeks to look into the accusations.

Byron Harris, an economist with the Consumer Advocate Division, said "The Kroll documents raise serious issues, and I'm not sure the commission has adequately reflected on their seriousness."

Kroll, formerly Dominion Hope's manager for pricing and regulatory affairs, says company officials schemed to buy gas from their drilling affiliates at unnecessarily high prices.

This allowed the affiliates and Dominion to benefit at ratepayers' expense. To deceive regulators, Dominion Hope officials shifted assets from operations in West Virginia to Ohio, according to Kroll.

Kroll has submitted to the PSC more than 100 double-spaced pages of transcripts of secretly recorded phone conversations he had with other Dominion Hope officials when he was still with the company, according to Ken Ward, Jr.

Dominion Hope denies the allegations.

PSC Chairman Michael Albert said that commissioners had discovered a number of difficulties over the audit after agreeing to authorize it.

There are concerns the audit could affect Dominion Hope's planned $970 million sale to Equitable Resources Inc. of Pittsburgh, another big gas utility in West Virginia.

If Kroll is accurate, Dominion could have a major refund problem.

Kroll is scheduled to testify again before the PSC on September 17.

It seems unclear if the PSC is letting Dominion Hope off the hook, or moving in a direction to bring "clarity" to the problem.


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