Document:

Amendment to Change of Control Agreement with Robert J. Griffin dated April
      3, 2006

    EXHIBIT
      10.4

    

    

    

    

    

    

    April
      3,
      2006

    

    Mr.
      Robert J. Griffin

    Vice
      President, Power Supply

    Planning
      & Risk Management

    Green
      Mountain Power Corporation

    163
      Acorn
      Lane

    Colchester,
      VT 05446

    

    Re:
      Amendment to Change of Control Agreement

    

    Dear
      Bob:

    

    Please
      sign in the space indicated below to confirm your agreement that (i) the Change
      of Control Agreement, dated February 10, 2004 (the “Agreement”), between you and
      Green Mountain Power Corporation (the “Company”) shall be amended to reflect
      your new position as Vice President, Power Supply Planning & Risk
      Management, and (ii) except as amended herein, the Agreement shall remain
      unchanged and in full force and effect. 

    

    Very
      truly yours,

    

    

    By:/s/
      Nordahl L. Brue   

    Nordahl
      L. Brue, Chairman

    Board
      of
      Directors

    Green
      Mountain Power Corporation

    

    AGREED
      to this
      3rd

    day
      of
      April, 2006 

    

    

    /s/
      Robert J. Griffin    

    Robert
      J.
      Griffin

    Vice
      President, Power Supply

    Planning
      & Risk Management

    Green
      Mountain Power CorporationExhibit 10.1 Settlement Agreement and Release

    EXHIBIT
      10.1

    SETTLEMENT
      AGREEMENT
      AND RELEASE

    

    This
      Settlement Agreement and Release (“Agreement”) is entered into this 17
      day of
      January, 2006, between and among the PEOPLE OF THE STATE OF ILLINOIS, through
      LISA MADIGAN, ILLINOIS ATTORNEY GENERAL (the “Illinois Attorney General”) and
      the CITY OF CHICAGO (the “City of Chicago”), PEOPLES ENERGY CORPORATION, an
      Illinois Corporation, THE PEOPLES GAS, LIGHT AND COKE COMPANY, an Illinois
      Corporation (“Peoples Gas”), PEOPLES MW, LLC., a Delaware Limited Liability
      Company, PEOPLES ENERGY RESOURCES COMPANY, LLC., an Illinois Limited Liability
      Company, and NORTH SHORE GAS COMPANY, an Illinois Corporation (“North Shore
      Gas”) (Peoples Energy Corporation, Peoples Gas, Peoples MW LLC, Peoples Energy
      Resources LLC and North Shore Gas are collectively hereinafter referred to
      as
      the “Peoples Companies,” unless otherwise designated individually).

     

    WHEREAS,
      the
      Illinois Attorney General commenced an action against the Peoples Companies
      in
      the Circuit Court of Cook County, Illinois, County Division, Chancery
      Department, styled The
      People of the State of Illinois v. Peoples Energy Corp., et al.,
      No. 05
      CH 5124, and the City of Chicago commenced an action against the Peoples
      Companies in the Circuit Court of Cook County, Illinois, County Division,
      Chancery Department, styled City
      of Chicago v. The Peoples Gas Light & Coke Company, et al.,
      No. 05
      CH 5107, which two actions were consolidated (the “Litigation”);

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    WHEREAS,
      the
      Illinois Attorney General and the City of Chicago alleged that: (a) from 1999
      to
      2002, the Peoples Companies and Enron North America carried out a scheme to
      illegally divert assets from the regulated natural gas utility, Peoples Gas,
      to
      Peoples Energy Corporation and to inflate Peoples Gas’s and North Shore Gas’s
      natural gas costs and pass those inflated costs on to Illinois consumers; and
      (b) the Peoples Companies carried out this scheme through a series of fraudulent
      natural gas transactions, sham companies, illegal agreements, and
      misrepresentations to consumers. The Illinois Attorney General alleged that
      the
      Peoples Companies’ actions resulted in increased natural gas costs for Illinois
      consumers and violated the Illinois Consumer Fraud and Deceptive Business
      Practices Act (“Consumer Fraud Act”). (815 ILCS 505/1 et seq.). The City
      of
      Chicago alleged that the Peoples Companies’ actions resulted in increased
      natural gas costs for Chicago consumers and violated Municipal Code of Chicago
      Sections 4-276-470, 2-24-060 and 1-20-020. The Peoples Companies denied these
      allegations;

     

    WHEREAS,
      in the
      Litigation (a) the Illinois Attorney General seeks equitable relief against
      the
      Peoples Companies, penalties against Peoples Gas and North Shore Gas, and
      disgorgement of profits from and penalties against Peoples Energy Corporation,
      Peoples Energy Resources Company, LLC and Peoples MW, LLC for the alleged
      violations of the Consumer Fraud Act, (b) the City of Chicago seeks equitable
      and compensatory relief and penalties from Peoples Gas, Peoples Energy
      Corporation, Peoples Energy Resources Company, LLC and Peoples MW, LLC for
      the
      alleged violations of Municipal Code of Chicago Sections 4-276-470, 2-24-060
      and
      1-20-020, and (c) the Peoples Companies deny that the Illinois Attorney General
      or the City of Chicago is entitled to any of the relief requested;

     

    

    
      
        
           

          

          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    

    WHEREAS,
      there
      is also currently pending before the Illinois Commerce Commission (the “ICC”)
      statutory reconciliation proceedings for the years 2000 through 2004 involving
      Peoples Gas (ICC Docket Nos. 00-0720, 01-0707,
      02-0727, 03-0705, 04-0683) and
      North
      Shore Gas (ICC Docket Nos. 00-0719,
      01-0706, 02-0726, 03-0704, 04-0682)
      (the
      “Reconciliation Cases”);

     

    WHEREAS,
      the
      City of Chicago and the Illinois Attorney General either have appeared or
      intervened in the Reconciliation Cases and alleged that Peoples Gas and North
      Shore Gas acted imprudently in purchasing natural gas and passed on imprudent
      gas costs resulting in unnecessarily increased gas charges to consumers in
      violation of Section 9-220(a) of the Illinois Public Utilities Act, 220 ILCS
      5/9-22(a) and
      various ICC rules, and Peoples Gas and North Shore Gas have denied these
      allegations;

    WHEREAS,
      the
      Peoples Companies, the Illinois Attorney General and the City of Chicago wish
      to
      fully adjust, compromise and settle all rights and claims they may have against
      each other by reason of the Litigation and the Reconciliation Cases;
      and

     

    WHEREAS,
      this
      Agreement does not constitute an admission by or finding against the Peoples
      Companies that any of the conduct alleged in the Litigation and the
      Reconciliation Cases was wrongful, unlawful or in violation of any law,
      regulation or rule.

     

    NOW
      THEREFORE,
      the
      Peoples Companies, the Illinois Attorney General and the City of Chicago agree
      as follows: 

    

    
      
        
           

          

          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    

    
      	
              I.

            	
              CUSTOMER
                REFUND 

               

            

    

    A. Refund
      to Customers. Peoples
      Gas and North Shore Gas jointly agree to refund the total sum of $100 million
      to
      Peoples Gas’ and North Shore Gas’ customers in a manner consistent with the
      terms of this Agreement. 

     

    B. ICC
      Approval of Refund. The
      final
      settlement of the Reconciliation Cases is subject to approval by the ICC, which,
      as provided herein, other than the obligations contained in Sections III(B),
      IV
      and V, is a condition precedent to the terms of this Agreement.

     

    C. Payment
      of Customer Refund. The
      Customer Refund shall be paid as follows:

     

    
      	 	
              1.

            	
              By
                crediting, on a per capita basis, the bills of all North Shore Gas’ and
                Peoples Gas’ customers as follows: (a) a payment in the amount of $50
                million that shall begin within 30 days following ICC approval of
                this
                Agreement (“First Payment”); and (b) a payment in the amount of $50
                million that shall begin 12 months after the First Payment. 

               

            

    

    
      	 	
              2.

            	
              The
                refund amounts shall be clearly and conspicuously identified on all
                customers’ bills as a credit against current charges, in a manner
                acceptable to the Illinois Attorney General and the City of
                Chicago.

               

            

    

    
      	 	
              3.

            	
              In
                the event that the ICC does not approve a per capita refund, the
                Customer
                Refund shall be paid by a method that is acceptable to the ICC, provided,
                however, that the Customer Refund is $100 million and is paid in
                two $50
                million payments. 

            

    

    

    
      
        
           

          

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    

    D. Parties
      Cooperation to Obtain ICC Approval. All
      parties to this Agreement shall take all necessary and commercially reasonable
      actions to obtain ICC approval of the settlement of the Reconciliation Cases
      including, within five business days of all parties’ execution of this
      Agreement, the filing of a motion before the ICC requesting expedited review
      and
      disposition and approval of the settlement of the Reconciliation Cases as
      described in this Agreement. Nothing in this Agreement is intended to limit
      in
      any way the ICC’s authority to review and determine whether to approve the
      settlement of the Reconciliation Cases.

     

    E. ICC
      Approval. If
      the
      ICC fails to approve the settlement of all Reconciliation Cases, this Agreement
      (and all obligations and agreements contained herein) shall be null and void
      with the exception of those described in Sections III(B), IV and V of this
      Agreement. The Parties agree that in the event the ICC does not approve the
      $100
      million refund amount or conditions contained in Sections I(C) of this
      Agreement, the Illinois Attorney General, the City of Chicago and the Peoples
      Companies are in no way limited or prevented from pursuing the Litigation or
      the
      Reconciliation Cases or from participating, reinstating or asserting any legal
      rights, allegations, defenses, counterclaims, cross claims, appeals or any
      other
      right or assertion allowed by law, statute or regulation and that the Litigation
      and the Reconciliation Cases continue status quo ante.

    

    
      
        
           

          

          
          

        

        
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    II. CONSERVATION
      AND WEATHERIZATION PROGRAM PAYMENTS

     

    As
      described more fully below, Peoples Energy Corporation shall pay to the City
      of
      Chicago and the Illinois Attorney General, jointly, up to $5 million per year
      for six years totaling up to $30 million. All payments shall be made payable
      to
      the Illinois Attorney General and the City of Chicago, jointly, unless they
      mutually designate, in writing, payment in another way or to another party
      or
      parties. The payments shall be made as follows:

     

    
      	 	
              A.

            	
              The
                first installment of up to $5 million (“First Installment”) shall be made
                within 15 business days after the ICC approves the settlement of
                the
                Reconciliation Cases. From the First Installment, the Peoples Companies
                shall receive a credit in the amount of $675,000 towards the settlement
                of
                the case styled The
                Peoples Gas Light and Coke Company v. City of Chicago
                (No. 03 L 2212 Cir. Ct. Cook County). The City of Chicago and Illinois
                Attorney General, jointly and in their discretion, shall determine
                the use
                and expenditure of the First Installment. The Illinois Attorney General
                shall use any payments that she controls for purposes specified under
                Section 7(e) of the Consumer Fraud Act, 815 ILCS 505/7(e).
                

            

    

    

    
      
        
           

          

          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

    

    
      	 	
              B.

            	
              Peoples
                Energy Corporation shall pay the five subsequent payments of up to
                $5
                million, which amounts shall be prepaid, on each anniversary of the
                First
                Installment (the “Subsequent Payments”). The Subsequent Payments shall be
                based upon the amount of the cost for the design, implementation
                and
                administration of programs, as estimated in the sole discretion of
                the
                Illinois Attorney General and the City of Chicago (the “Estimated
                Amount”). The Estimated Amount shall be submitted by the Illinois Attorney
                General and the City of Chicago to Peoples Energy Corporation by
                written
                statements. The programs shall be for the following purposes:

               

            

    

    
      	 	 	
              1.

            	
              To
                fund a program of conservation and weatherization for low and
                moderate-income residential dwellings (the “Program”). The Program shall
                be jointly administered by City of Chicago on behalf of the City
                of
                Chicago and Illinois Attorney General on behalf of the State of Illinois
                or by any other agency, entity or representative to which the Illinois
                Attorney General and City of Chicago, in writing, mutually agree.
                The
                Program shall have the purpose of providing energy and natural gas
                conservation programs, whether residential improvements or educational
                or
                otherwise, for residents within Peoples Gas’ or North Shore Gas’ service
                areas and shall have the goal of reducing those residents’ energy usage
                and costs.

            

    

    

    
      
        
           

          

          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

    

    
      	 	 	
              2.

            	
              Failure
                to use or expend $5 million in any year after the payment of the
                First
                Installment shall in no way affect the Illinois Attorney General’s or the
                City of Chicago’s ability to request and receive funding up to the maximum
                amount of $5 million in any subsequent year or, subject to the requirement
                of this Section II(B), in any way relieve the Peoples Energy Corporation
                of its obligations to make any of the Subsequent Payments. 

               

            

    

    
      	
              III.

            	
              ADOPTION
                OF MANAGEMENT PROPOSALS

               

            

    

    
      	 	
              Peoples
                Gas and North Shore Gas will adopt the forward-looking “Management”
                proposals requested in the Joint Initial Briefs of the City of Chicago,
                the Illinois Attorney General and the Citizens Utility Board in ICC
                Docket
                Nos. 01-0706 and 01-0707. 

               

            

    

    A. These
      forward-looking “Management” proposals, the implementation of which is
      contingent upon ICC approval of the settlement of the Reconciliation Cases,
      are:

     

    
      	1.  	
              Peoples
                Gas and North Shore Gas each shall update its operating agreement,
                which
                were approved by the ICC in Docket No. 55071.

               

            

    

    
      	2.  	
              For
                a period of five years, Peoples Gas and North Shore Gas each shall
                perform
                an annual internal audit of gas purchasing and submit a copy of the
                audit
                report to the Manager of the ICC’s Accounting Department.

               

            

    

    
      	3.  	
              Peoples
                Gas and North Shore Gas each shall engage outside consultants to
                perform a
                management audit of its gas purchasing practices, gas storage operations
                and storage activities. The firm selected to perform the audit shall
                be
                independent of Peoples Gas, North Shore Gas and their affiliates,
                ICC
                Staff, the City of Chicago, the Illinois Attorney General and the
                Citizens
                Utility Board and shall be approved by the ICC. Peoples Gas and North
                Shore Gas shall submit monthly reports on the progress of the management
                audit to the Chief of the ICC’s Public Utilities Bureau, with a copy to
                the Manager of the ICC’s Accounting Department, until the management audit
                report has been submitted. Upon completion of the management audit,
                copies
                of the management audit report would be submitted to the Chief of
                the
                ICC’s Public Utilities Bureau and the Manager of the ICC’s Accounting
                Department. 

               

            

    

    
      	 	
              B.

            	
              Nothing
                in this Agreement shall require the Peoples Companies to conduct
                any
                management or financial audit of gas purchases or transactions for
                their
                1999-2004 fiscal years. Peoples Energy Corporation acknowledges that
                it is
                its Board of Directors’ responsibility to set and implement policy.
                Peoples Energy Corporation further acknowledges that its Chief Executive
                Officer reports to its Board of Directors through its Lead Director.
                The
                acknowledgments contained in this Section III(B) do not require ICC
                approval of the settlement of the Reconciliation Cases.
                

            

    

    

    
      
        
           

          

          
          

        

        
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              IV.

            	
              RECONNECTION
                AND DEBT FORGIVENESS OF DISCONNECTED
                CUSTOMERS

            

    

    

    A. Disconnected
      Customers. The
      Peoples Companies acknowledge that approximately 12,000 past customers of
      Peoples Gas and North Shore Gas are presently not receiving gas from the Peoples
      Companies (“Disconnected Customers”). Approximately $14 million of past due
      accounts are attributable to Disconnected Customers. Peoples Gas and North
      Shore
      Gas acknowledge that certain Disconnected Customers, involving customer-occupied
      residential premises, are hardship cases (the “Hardship Cases”). The Peoples
      Companies shall cooperate with the Illinois Attorney General and the City of
      Chicago and any other entity or agency designated by the Illinois Attorney
      General and the City of Chicago to identify the Hardship Cases. 

     

    B. Reconnection
      of Hardship Cases.
       Within
      three days following identification, Peoples Gas and North Shore Gas shall
      reconnect the Hardship Cases without charge. The Peoples Companies shall
      cooperate with the Illinois Attorney General and the City of Chicago and any
      other entity or agency designated by the Illinois Attorney General and the
      City
      of Chicago to identify the Hardship Cases. Peoples Gas and North Shore Gas
      shall
      relieve and forgive all outstanding debt of the Hardship Cases. The Hardship
      Cases may be identified by either the Peoples Companies or the Illinois Attorney
      General and the City of Chicago. Upon
      determination by and notice from the Illinois Attorney General or the City
      of
      Chicago, Peoples Gas and North Shore Gas will advise credit-reporting agencies
      to remove adverse credit information from the credit reports of the customers
      who are the Hardship Cases. 

    

    
      
        
           

          

          
          

        

        
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              C.

            	
              No
                Illinois Commerce Commission Approval. Upon execution of
                this Agreement by all of the parties, the Peoples Companies agree
                to
                fulfill the obligations described in this Section IV notwithstanding
                lack
                of ICC approval of the settlement of the Reconciliation Cases.
                

               

            

    

    
      	
              V.

            	
              PROJECTED
                BAD
                DEBT

               

            	 

    

    In
      addition to the obligations above, the Peoples Companies project absorbing,
      recording and, ultimately, writing off, approximately $52.3 million in bad
      debt
      resulting from accounts that its customers, for a variety of reasons, are unable
      to pay. If the Peoples Companies fail to absorb and record approximately $52.3
      million in bad debt for the fiscal year ending September 30, 2006 (“FY2006”),
      the Peoples Companies agree to absorb and record at least the difference between
      $52.3 million and the amount actually absorbed and recorded in FY2006 during
      the
      fiscal year ending September 30, 2007 or in any subsequent fiscal year. To
      the
      extent that this bad debt relates to the Hardship Cases, Peoples Gas and North
      Shore Gas agree not to pursue collection of those past accounts, but without
      prejudice to the collection of further amounts incurred. The Hardship Cases
      may
      be identified by either the Peoples Companies or the Illinois Attorney General
      and the City of Chicago. Upon determination by and notice from the Illinois
      Attorney General or the City of Chicago, Peoples Gas and North Shore Gas will
      advise credit-reporting agencies to remove adverse credit information from
      the
      credit reports of the customers who are the Hardship Cases.

    

    
      
        
           

          

          
          

        

        
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    VI. MISCELLANEOUS

     

    A. Effective
      Upon Execution. This
      Agreement shall be effective upon execution by all of the parties to the
      Agreement and may be executed in one or more counterparts.

     

    
      	 	
              B.

            	
              Circuit
                Court Approval and Order Entered and Recorded.
                The Peoples Companies, the Illinois Attorney General and the City
                of
                Chicago shall seek judicial approval of this Agreement and the entry
                of an
                Agreed Order staying all proceedings in the Litigation until the
                ICC
                enters an order regarding the settlement of the Reconciliation Cases.
                This
                Agreement shall be included as an exhibit to any such Agreed Order.
                The
                parties to this Agreement shall take all necessary and commercially
                reasonable actions to obtain judicial approval of this Agreement.
                Failure
                to obtain such judicial approval shall make this Agreement null and
                void.
                In the event of failure to obtain judicial approval, the Peoples
                Companies, the Illinois Attorney General and the City of Chicago
                in no way
                are limited or prevented from pursuing the Litigation or the
                Reconciliation Cases or from participating, reinstating or asserting
                any
                legal rights, allegations defenses, counterclaims, cross claims,
                appeals
                or any other right or assertion allowed them by law, statute or regulation
                and that the Litigation and the Reconciliation Cases continue status
                quo
                ante. Upon entry of an order by the ICC approving the settlement
                of the
                Reconciliation Cases, the parties shall seek entry of a consent decree
                pursuant to 735 ILCS 5/2-1009 dismissing the Litigation with
                prejudice.

            

    

    

    
      
        
           

          

          
          

        

        
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    C. Jurisdiction. 
      Notwithstanding the dismissal of the Litigation with prejudice, the Peoples
      Companies, the Illinois Attorney General and the City of Chicago agree that
      the
      Circuit Court of Cook County, Chancery Division, shall retain jurisdiction
      to
      interpret and enforce the terms of this Agreement.

     

    
      	 	
              D.

            	
              Binding
                Agreement.
                This Agreement shall be binding upon, and its benefits shall inure
                to the
                Peoples Companies and their respective heirs, representatives, successors
                and assigns, as well as the respective representatives, successors
                and
                assigns of the Illinois Attorney General and the City of Chicago.
                

               

            

    

    E. Mutual
      Release. In
      accordance with and completion of the terms herein, this Agreement is: (1)
      intended to release and discharge any and all claims that the Illinois Attorney
      General or the City of Chicago ever had, now have or claim or might have or
      claim against the Peoples Companies based upon, arising out of or relating
      to,
      in whole or in part, through the effective date of this Agreement, the
      Litigation, the Reconciliation Cases, and the subpoena served upon Peoples
      Energy Corporation by the Illinois Attorney General, dated August 25, 2005,
      and
      (2) is intended to release and discharge any and all claims that the Peoples
      Companies ever had, now have or claim or might have or claim against the
      Illinois Attorney General or the City of Chicago based upon, arising out of,
      or
      relating to, in whole or in part, through the effective date of this Agreement,
      the Litigation, the Reconciliation Cases and the subpoena served upon Peoples
      Energy Corporation by the Illinois Attorney General, dated August 25,
      2005.

    

    
      
        
           

          

          
          

        

        
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    F. Entire
      Agreement. All
      understandings and agreements heretofore made between the parties are superseded
      by and merged into this Agreement, which alone fully and completely expresses
      the agreement between the parties relating to its subject matter, and the same
      is entered into with no party relying upon any statement or representation
      not
      embodied in this Agreement. Any modification of this Agreement may be made
      only
      by an instrument in writing signed by or on behalf of the party to be bound
      by
      such modification. 

     

    G. Severability. If
      any
      portion, clause, phrase or term of this Agreement is later determined by a
      court
      of law to be invalid or unenforceable, for whatever reason, the remaining
      provisions of this Agreement will remain valid and in effect as to the parties,
      and will be unaffected by said determination other than those portions which
      are
      agreed herein to be a condition precedent.

     

    H. Authority
      to Enter Into the Agreement. The
      signatories below, except for the City of Chicago, acknowledge that they have
      the lawful authority to bind the parties for whom they are signing to the terms
      of this Agreement.

     

    I. No
      Admission of Liability. Nothing
      in this Agreement, or any acts performed or documents executed in furtherance
      of
      this Agreement, shall constitute or may be used as an admission that any party
      to this Agreement is liable to any other party or of the validity of any
      allegation or claim or defense contained in the Litigation or the Reconciliation
      Cases.

    

    
      
        
           

          

          
          

        

        
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    J. Recitals. The
      recitals at the beginning of this Agreement are, and shall be construed to
      be,
      an integral part of this Agreement.

     

    K. Headings
      and Interchangeability. The
      headings of sections contained in this Agreement are merely for convenience
      of
      reference and shall not affect the interpretation of any of the provisions
      of
      this Agreement. Whenever the context so requires, the singular shall include
      the
      plural and vice versa. All words and phrases shall be construed as masculine,
      feminine, or gender neutral, according to the context. This Agreement is deemed
      to have been drafted jointly by the parties and any uncertainty or ambiguity
      shall not be construed for or against any party as an attribution of drafting
      to
      such party.

     

    L. Governing
      Law. This
      Agreement shall be governed by, construed and enforced in accordance with the
      laws of the State of Illinois without regard to the choice of law principles
      thereof.

     

    IN
      WITNESS WHEREOF, the
      parties hereto have executed this Settlement Agreement and Release as of day
      and
      year above first written. 

     

    
      	
              THE
                PEOPLE OF THE STATE OF ILLINOIS

               

              /s/
                Paul J. Gaynor

              By:
                The Office of Illinois Attorney General

            	
              THE
                CITY OF CHICAGO

               

              By:
                /s/
                Mara S. Georges

               

              Title:
                Corporation
                Counsel

            
	
              THE
                PEOPLES COMPANIES (as
                defined in this Agreement)

               

              By:
                /s/
                Theodore R. Tetzlaff

               

              Title:
                _____________________

            	 

    

    

    
      
        
           

          

          
          

        

        
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    SETTLEMENT
      AGREEMENT AND RELEASE

    

    IN
      WITNESS WHEREOF, the CITIZENS UTILITY BOARD, by authorized signature herein,
      executes the Settlement Agreement entered into on January 17, 2006 between
      and
      among the PEOPLE OF THE STATE OF ILLINOIS, through LISA MADIGAN, ILLINOIS
      ATTORNEY GENERAL (the "Illinois Attorney General") and the CITY OF CHICAGO
      (the
      "City of Chicago"), PEOPLES ENERGY CORPORATION, an Illinois Corporation, THE
      PEOPLES GAS, LIGHT AND COKE COMPANY, an Illinois Corporation ("Peoples Gas"),
      PEOPLES MW, LLC., a Delaware Limited Liability Company, PEOPLES ENERGY RESOURCES
      COMPANY, LLC., an Illinois Limited Liability Company, and NORTH SHORE GAS
      COMPANY, an Illinois Corporation ("North Shore Gas") and agrees to be bound
      by
      all terms therein. A copy of said Settlement Agreement is attached
      hereto.

    

    

    THE
      CITIZENS UTILITY BOARD

    

    By:
        /s/
      David Kolata

    

    Title:
      Executive
      Director

    

    Date:
      February 27, 2006

    

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Settlement
      Agreement Amendment and Addendum

    Page
      1
of 
      7

    

    Amendment
      and Addendum to January 17, 2006 Settlement

    Agreement
      among and between Peoples Energy Corporation,

    Peoples
      Gas Light and Coke Company, Peoples MW, LLC, Peoples

    Energy
      Resources Company, LLC, North Shore Gas Company, the

    City
      of Chicago, the State of Illinois and the Citizen’s Utility
      Board.

    

    

    Pursuant
      to Section VI, F of the Settlement Agreement (“Settlement Agreement”) entered
      into on January 17, 2006 between and among the PEOPLE OF THE STATE OF ILLINOIS,
      through LISA MADIGAN, ILLINOIS ATTORNEY GENERAL (the “Illinois Attorney
      General”) and the CITY OF CHICAGO (the “City of Chicago”), PEOPLES ENERGY
      CORPORATION, an Illinois Corporation, THE PEOPLES GAS, LIGHT AND COKE COMPANY,
      an Illinois Corporation (“Peoples Gas”), PEOPLES MW, LLC., a Delaware Limited
      Liability Company, PEOPLES ENERGY RESOURCES COMPANY, LLC., an Illinois Limited
      Liability Company, and NORTH SHORE GAS COMPANY, an Illinois Corporation (“North
      Shore Gas”) (Peoples Energy Corporation, Peoples Gas, Peoples MW LLC, Peoples
      Energy Resources LLC and North Shore Gas are collectively hereinafter referred
      to as the “Peoples Companies,” unless otherwise designated individually), and
      entered into on February 27, 2006 by the CITIZEN’S UTILITY BOARD (“CUB”), This
      Amendment and Addendum is intended as an Agreement to Amend the Settlement
      Agreement as follows:. 

    

    This
      Amendment and Addendum is intended to comply with the requirements of the
      Settlement Agreement, Section VI, F, requiring all modifications to the
      Settlement Agreement to be in writing.

    

    Other
      than as specifically stated below, this letter is not intended to modify or
      amend any terms of the January 17, 2006 Settlement Agreement.

    

    In
      addition to, or where otherwise noted below in modification of, the terms of
      the
      January 17, 2006 Settlement Agreement, it is hereby agreed to by the Illinois
      Attorney General, the City of Chicago, CUB, and the Peoples Companies as
      follows:

    

    Amendment
      Section A: 

    

    Peoples
      Gas and North Shore Gas’ future HUB Revenues: 

    

    Upon
      approval of the settlement agreement, Peoples Gas and North Shore Gas and all
      Peoples Companies shall account for all of their HUB revenues and third-party
      non-tariff revenues, and any other revenues referred to as HUB revenues or
      non-tariff revenues (as those terms have been used in ICC Docket 01-0707) in
      accordance with 83 Ill. Admin. Code 525.40(d)). All such revenues shall serve
      to
      offset “recoverable gas costs” to arrive at the “gas charge” as those terms
      are

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Settlement
      Agreement Amendment and Addendum

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      2
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    used
      in
      the Illinois Commerce Commission rules part 525.40(d) and in accordance with
      the
      Public Utilities Act. 83 Ill. Admin. Code 525.40(d); 220 ILCS 5/1-101
et.
      seq.
      The
      Peoples Gas and North Shore Gas and all Peoples Companies agree that this
      accounting of these revenues shall apply to all future Purchased Gas Adjustment
      reconciliation cases and rate cases filed by Peoples Gas and North Shore
      Gas.

    

    Amendment
      Section B: 

    

    Peoples
      Gas and North Shore Gas’ HUB Revenues addressed in dockets 05-0748 and 05-0749
      and in any fiscal year 2006 reconciliation cases regarding Peoples Gas’ and
      North Shore Gas’ Purchased Gas for the 2005/2006 Heating Season:

    

    Peoples
      Gas and North Shore Gas and all Peoples Companies agree that they will not
      oppose an adjustment for the reconciliation years 2005 and 2006 based on HUB
      revenues that have not, to date, been used to offset consumer gas charges in
      those years. 

    

    Peoples
      Gas and North Shore Gas and all Peoples Companies will account for all HUB
      revenues and third-party non-tariff revenues, and any other revenues referred
      to
      as HUB revenues or non-tariff revenues (as those terms have been used in ICC
      Docket 01-0707) for fiscal year 2005 as offsets to the Gas Charge in accordance
      with 83 Ill. Admin. Code 525.40(d) and have agreed not to oppose any offset
      of
      PGA costs addressed in Dockets 05-0748 and 05-0749. Peoples Gas and North Shore
      Gas and all Peoples Companies also agree not to oppose any HUB revenue offset
      of
      PGA costs to be addressed in any purchased gas reconciliation case regarding
      Peoples Gas and North Shore Gas that address periods after fiscal year 2005
      and
      prior to the effective date of new rates approved by the Illinois Commerce
      Commission in the rate cases that the utilities have announced they will file.
      For Dockets 05-0748 and 05-0749 Peoples Gas and North Shore Gas agree to re-file
      and amend any testimony filed in those dockets that is not consistent with
      this
      Amendment and Addendum.

    

    Amendment
      Section C:

    

    Peoples
      Companies’ Agreement to Findings 7, 8, 9, 11, 12, 14 and 15 of the ALJ Proposed
      Order Dated September 20, 2005:

    

    Peoples
      Companies hereby agree to implement prospectively findings 7,
      8, 9,
      11, 12, and 14 of the Administrative Law Judge’s Proposed Order in Docket
      01-0707, entered on September 20, 2005 (“ALJ’s Proposed Order”).

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Settlement
      Agreement Amendment and Addendum

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    Peoples
      Companies also agree to comply with finding 15 of the ALJ’s Proposed Order for
      the purpose of allowing the ICC to be able to consider fiscal years 1999-2004
      in
      making prospective behavioral and other recommendations, but not to suggest
      any
      further monetary adjustments beyond the refunds included in the January 17,
      2006
      Settlement Agreement. 

    

    The
      relevant findings of the ALJ’s Proposed Order are attached as Exhibit A to this
      filing.

    

    Amendment
      Section D:

    

    Refund
      To Be Paid In Manner Ordered By the Illinois Commerce
      Commission:

    

    As
      already provided in Section I, C, 3 of the January 17, 2006 Settlement
      Agreement, the Parties agree that the $100 million refund shall be paid by
      any
      method that is acceptable to the ICC. 

    

    Amendment
      Section E:

    

    Interest
      To Be Paid On Refund Amounts:

    

    Peoples
      Companies hereby agree to calculate interest on all refund payments made at
      the
      interest rate provided for in 83 Ill. Admin. Code Part 280.70(e)(1). Interest
      paid on refunds will be calculated prospectively from the date of the Illinois
      Commerce Commission order approving the Settlement Agreement until the refunds
      are paid. 

    

    

    Amendment
      Section F:

    

    Peoples
      Companies agree to forgive all outstanding bad debt for Fiscal Years 2000
      through 2005.

    

    Peoples
      Companies agree to forgive all outstanding bad debt from fiscal years 2000-2005
      existing at the time of the execution of this addendum. Bad debt shall be
      defined as those accounts which have been disconnected and on which no payment
      has been made for six months. Peoples Companies represent that this amount
      totals approximately $207 million and comprises over 250,000 customer accounts.
      Peoples Companies also represent that these amounts are currently in, or subject
      to, collection. 

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

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      Agreement Amendment and Addendum

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    For
      both
      the Hardship cases within the projected $52.3 million debt for fiscal year
      2006
      identified in the January 17,2006 Settlement Agreement Section V and the $207
      million identified above, the Peoples Companies agree that they will not pursue,
      directly or indirectly, collection of these amounts from customers or use any
      forgiven amounts as a reason to deny gas service to any customer, and that
      they
      will communicate with the credit reporting agencies for each of these customers
      to remove the adverse credit effects of any reporting of these past due amounts
      and expunge this debt from consumers’ account records, relieving said consumers
      from the debt forever and always.

    

    Amendment
      Section G:

    

    Peoples
      Companies Not To Seek Recovery of Debt Write-Off or Forgiveness In Any Future
      Rate or Reconciliation Cases.

    

    Peoples
      Companies hereby agree that they will not seek recovery in any future rate
      or
      reconciliation cases of any amounts of debt written-off or relieved under
      Sections IV and V of the January 17, 2006 Settlement Agreement. Peoples
      Companies hereby agree that they will not seek recovery in any future rate
      or
      reconciliation cases of any amounts of debt written-off or relieved under
      Section F of this Amendment and Addendum. This agreement does not affect the
      ability of Peoples Companies to recover any future bad debt as specifically
      authorized by the ICC now or in the future. Peoples Companies hereby agree
      that
      they will not seek recovery in any future rate or reconciliation cases of any
      amounts associated with the Conservation and Weatherization Program described
      in
      Section II of the January 17, 2006 Settlement Agreement. 

    

    Amendment
      Section H:

    

    Peoples
      Companies agree to permanently enact the hardship reconnection program described
      in Section IV of the January 17, 2006 Settlement Agreement.

    

    

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

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    IN
      WITNESS WHEREOF, the
      parties hereto have executed this Amendment to the Settlement Agreement and
      Release on March 6, 2006.

    

    

    

    THE
      PEOPLE OF THE STATE OF ILLINOIS

    

    /s/
      David Adams, Assistant Attorney General

    By:
      The
      Office of Illinois Attorney General

    

    

    THE
      CITY
      OF CHICAGO

    

    

    By:
      /s/
      Mara S. Georges

    

    Title:
      Corporation
      Counsel

    

    

    THE
      CITIZEN’S UTILITY BOARD

    

    By:
      /s/
      David Kolata

    

    Title:
      Executive
      Director

    

    

    THE
      PEOPLES COMPANIES (as defined in this letter above)

    

    

    By:
      /s/
      Theodore R. Tetzlaff

    

    Title:
      General
      Counsel

    

    

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

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      Agreement Amendment and Addendum

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    Exhibit
      A to Settlement Agreement Amendment and Addendum

    

    
      	 	
              (7)
                

            	
              Peoples
                Gas Light and Coke Company shall update its operating agreement,
                which was
                approved by this Commission in Docket No.
                55071;

            

    

    
      	 	
              (8)
                

            	
              Peoples
                Gas Light and Coke Company shall account for all gas physically injected
                into Manlove Field by including the cost associated with maintenance
                gas
                in the amount transferred from purchased gas expense to the gas stored
                underground account, Account 164.1;

            

    

    
      	 	
              (9)
                

            	
              Peoples
                Gas Light and Coke Company shall account for the portion of gas injected
                into the Manlove Storage Field to maintain pressure, as credits from
                Account 164.1, Gas Stored Underground, as charges to Account 117,
                Gas
                Stored Underground, in the case of recoverable cushion gas, or to
                Account
                101, in the case of non-recoverable portions of cushion
                gas;

            

    

    

    *  *  *

    

    
      	 	
              (11)
                

            	
              Peoples
                Gas Light and Coke Company shall revise its maintenance gas accounting
                procedures related to gas injected for the benefit of the North Shore
                Gas
                Company and third-parties to require those entities to bear the cost
                of
                maintenance gas, and it shall revise its maintenance gas accounting
                procedures to ensure that all customers/consumers bear equal
                responsibility for maintenance gas;

            

    

    
      	 	
              (12)
                

            	
              Peoples
                Gas Light and Coke Company shall submit its revised maintenance gas
                accounting procedures to the Commission’s Chief Clerk with a copy to the
                Manager of the Accounting Department within 30 days after the date,
                upon
                which, a final Order is entered in this
                docket;

            

    

    

    *  *  *

    

    
      	 	
              (14)
                

            	
              Peoples
                Gas Light and Coke Company shall submit quarterly reports reflecting
                its
                use of journal entries regarding maintenance gas to the Manager of
                this
                Commission’s Accounting Department within 45 days of the end of each
                quarter, after the date of a final order is entered in this docket,
                through the quarter ending September 30,
                2009;

            

    

    
      	 	
              (15)
                

            	
              Peoples
                Gas Light and Coke Company shall engage outside consultants to perform
                a
                management audit of its gas purchasing practices, gas storage operations
                and storage activities. The firm selected to perform the management
                audit
                shall be independent of Peoples Gas Light and Coke Company, its
                affiliates, Staff, and all parties in this docket, and approved by
                this
                Commission. Monthly reporting of the progress of the conduct of the
                management audit shall be submitted to the Bureau Chief of the
                Commission’s Public Utilities Bureau, with a copy to the Manager of
                the

            

    

    

    
      
        
           

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Settlement
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    Commission’s
      Accounting Department, until the management audit report has been submitted.
      Completion of this management audit shall occur no later than eighteen months
      after the date, upon which, a final order is entered in this docket. Upon
      completion, copies of the management audit reports shall be submitted to the
      Commission’s Public Utilities Bureau Chief and the Manager of the Commission’s
      Accounting Department;

    

    ALJ
      Proposed Order at 135-136.

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