Peoples Gas will soon increase financial pressure on Chicago customers, but not as much as expected — and without investing more money in the utility’s controversial pipeline replacement program next year.
State regulators on Thursday scaled back a request from Peoples Gas to raise rates starting next year, while putting the brakes on a program that has seen costs soar to nearly six times the initial estimate for replace the pipelines that carry natural gas to Chicago households.
The Illinois Commerce Commission voted 5-0 to cut the utility’s pipe replacement budget for 2024, suspended the program and ordered an investigation into spending that the commission chairman said , Doug Scott, “are not justified”.
It was part of a move that promises to increase customers’ gas bills from January. It’s not yet clear how much the costs will increase, but the monthly cost is expected to be less than $10.
Earlier this year, Peoples Gas announced it was seeking a record $402 million rate increase, which would have amounted to an additional $11.83 added to the average monthly residential bill.
Members of the commission, which has the final say on utility prices, recommended last month that the panel reduce the increase to $350 million, or about $10 more per month for each of the 878,000 residents of Chicago whose homes are powered by Peoples Gas.
Although the commission generally does not deviate much from staff recommendations, its final decision came down to about $301 million.
The exact impact on the average residential bill — which is calculated using complex formulas over hundreds of pages — was not immediately available. In a statement, the commission said it would “release an estimate of the bill’s impact on the average residential customer once utilities submit updated compliance records to the commission.”
Peoples Gas spokesman David Schwartz did not respond to the commission’s criticism of the pipeline program, but said in an email that the utility would “fully review the final order to determine its impact on our customers and our operations.
“We look forward to actively participating in future proceedings and demonstrating how critical our energy distribution system is to Chicago’s clean energy future,” Schwartz said. “We are pleased that the commission shares our safety concerns.”
Consumer advocates were stunned and jubilant in the Loop boardroom after the commission concluded the rate cases, which also largely curbed hikes for customers in suburban Nicor and North Shore Gas.
Sarah Moskowitz, executive director of the Citizens Utility Board, said the decision by the commission — which has three new members appointed by Gov. JB Pritzker since March — should signal to utilities that “Illinois customers will no longer be ATMs. »
“They’re going to hold these companies accountable to their customers, reporting on the clean energy transition in a way that I find extremely encouraging,” Moskowitz said.
Peoples Gas has long maintained that a substantial increase is necessary to ensure “the continued safety, reliability and environmental sustainability of the system in Chicago,” and that it expects rate increases to be offset by costs energy which are expected to decline over the next year.
The utility also said it was the first rate increase requested in nine years, although customers have still felt the effects of the pipeline program in the meantime.
More than $200 million of Peoples Gas’ initial increase request was intended to offset a $15 per month surcharge that customers have paid since 2013, but which expires at the end of the year under the state law. the state.
Those dollars went toward replacing the pipes on a neighborhood-by-neighborhood basis, a perennially delayed project that was initially expected to cost $1.7 billion but could end up totaling more than $11 billion by 2040.
“This has been a cash cow for People’s Gas, and they’ve taken advantage of this opportunity to charge their customers for unnecessary investments at a time when we should be looking for ways to move away from fossil heat,” Moskowitz said.
Abe Scarr, director of the Illinois Public Interest Research Group, applauded the commission for stopping “a slow-motion train wreck.”
“The pipe replacement program was the cause of the rate increase and would have been the cause of future rate increases,” Scarr said. “After allowing the program to fail and continue for years, the commission is very firmly putting the brakes on the program and creating a process to hopefully reform the program so that it is much more effective and much less costly for Chicago.”
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