Joe Albrecht, a Peoples Gas crew member, works on installing a 12-inch main on the 3200 block of West Eastwood in the Albany Park neighborhood in 2019. Peoples Gas ha been undertaking a massive underground overhaul of its residential natural gas pipe system.
Victor Hilitski/For the Chicago
The amount of extra cash Illinois’ natural gas companies wanted to pipe in from customers’ wallets was cranked back significantly on Thursday. That’s good news for people struggling to pay bills for heating and to operate appliances.
It also helps Illinois pursue its goal of transitioning to a greater use of renewable energy.
In January, four Illinois gas utilities requested significant rate increases, even though many people already are in arrears, unable to pay the bills they get now. Peoples Gas, for example, wanted a record $402 million increase, or about an average $11.83 per monthly bill, starting next year. Peoples serves 803,000 residential customers in Chicago.
But the Illinois Commerce Commission, which often has given utilities much of what they requested in the past, cut that proposed boost by 25% to $300 million. That trims the expected average increase in gas bills to about $6 per month.
The commission’s administrative law judge had proposed a total hike of $350 million, but the ICC unexpectedly cut that by another $50 million. (The actual change in gas bills can be affected by the future cost of natural gas, which can go up or down over time.)
“I think they sent a clear message it is not going to be business as usual, at least for the gas utilities here,” Citizens Utility Board Executive Director Sarah Moskowitz told us.
In a statement, AARP Illinois State Director Philippe Largent called the ICC ruling “a major win for natural gas customers in Chicago.” Midwest Equitable Building Decarbonization Advocate Madeline Semanisin of the Natural Resources Defense Council told us, “We are delighted.”
The ICC also trimmed Nicor Gas’ $320 million rate hike request to about $223 million and North Shore Gas’ $16.6 million request by nearly $5.6 million. Nicor serves customers in 31 northern Illinois counties. The downstate utility Ameren took a $36.34 million haircut from its $71.57 million request.
When all four utilities, along with ComEd, filed rate requests at virtually the same time earlier this year, consumer advocates worried the ICC would be swamped by the deluge of paperwork. But the ICC absolutely rose to the challenge.
The five-member ICC board, which has had three new members appointed by Gov. J.B. Pritzker since March, will rule on ComEd’s rate hike, the timing of which was essentially set by law, on Dec. 14. ComEd’s record rate increase request is for $1.5 billion over the next four years.
A key part of the ICC’s ruling was to pause Peoples’ multibillion-dollar pipeline replacement program to provide time to investigate the best way to address safety risks in some 1,100 miles of pipes in Chicago’s century-old network that haven’t been replaced. The cost of the program has ballooned to almost six times the original estimate.
In the meantime, Peoples will still be required to do what is necessary to keep the pipelines safe.
“The utilities were proposing to continue to spending at the elevated levels they had under the [Qualified Infrastructure Plant program],” said Abe Scarr, director of Illinois PIRG. The QIP paid for costs associated with replacing century-old iron pipes with plastic ones and boosting gas pressure.
The ICC also approved monthly credits for low-income Illinois gas utility customers. That’s important at a time when Peoples’ total arrearage — the number of people behind on their bills — is over $83 million as of October, even before the rate hike.
Originally, Peoples Gas wanted to increase the fixed charge — the amount people pay before using a therm of gas — from about $30 to $45, but that will stay at about $30. High fixed costs make it harder for people to save money by cutting back on the amount of gas they use.
“That’s another big one,” Scarr said.
Keeping a lid on natural gas costs will free up money for the state’s effort to invest in renewable energy. It’s a balancing act. The city needs a safe gas distribution system but also must be wary of using too much money over the next 40 years for gas pipelines instead of investing in renewable energy.
The ICC’s decision includes a plan for utilities to take into account the impacts of Illinois’ decarbonization and electrification goals on the natural gas system.
The utilities can file for rehearings, and if they don’t get favorable rulings, they can go to court. They also could go to the Legislature to change the law. But those efforts may not alter the ICC’s ruling significantly.
As winter approaches, Thursday’s news should warm the hearts of Illinois’ ratepayers.
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