Chicago officials to urge Illinois Commerce Commission to oppose Peoples Gas $144 million rate hike proposal

Chicago elected officials and other representatives from Illinois are pushing back on Peoples Gas' proposed $144 million rate hike.

A group of 38 alderpersons, state representatives, and state senators released a letter Tuesday, calling on the Illinois Commerce Commission to oppose the proposed hike, reject the utility's request for a 10.1% profit rate, and continue to work to reform its Pipe Retirement Program.

The group says Peoples Gas has raised rates by nearly $500 million since 2011.

In July the utility submitted a new rate hike that slashed approximately $58 million from its original $202 million rate hike proposal, but watchdog groups said it was not enough.

Citizens Utility Board and Illinois Public Interest Research Group have both decried the proposals, saying it includes hidden bonuses for corporate executives, inflated profit margins and wasteful spending on the Pipe Retirement Program.

Peoples estimated the original rate hike would raise the average household's monthly bills by $10-$11, while the new proposal would only add $7-8 a month. CUB and PIRG argue the hike puts too much of a burden on households, and there are viable alternative replacement plans that could save customers $2 billion.

Data from August shows more than 160,000 Peoples Gas residential customers are behind on payments.

'They're making really tough decisions between rent, grocery, and now staying warm, right?" said State Sen. Graciela Guzman (IL-20th). "So we expect corporations and the folks that help provide these essential services to understand them as essential services."

Guzman's district includes the north side of Chicago. She said many of her constituents are already behind on their bills. And if it comes down to food or heat, she's worried her clients will shiver.

"I'm absolutely worried. Again, half of consumers are already struggling. What that'll mean is that the majority of them may not be able to complete payment plans or even enter a payment plan. So I am worried," she said.

While customers are being asked to pay more, the Citizens Utility Board noted that Peoples Gas has posted record earnings in seven of the last nine years.     

"Peoples Gas has not been a good actor. They do not deserve one more cent from Chicagoans," said Ald. Maria Hadden (49th).

Peoples Gas said it's the ICC's own decision to retire more than 1,000 miles of old iron pipe below the streets of Chicago that's driving the hike.

In a statement, Peoples Gas wrote, "The Illinois Commerce Commission directed us to retire more than 1,000 miles of old iron pipe so Chicago's heating system remains safe and reliable. This complex, large-scale work requires substantial investment, and our rate request is to recover those costs. We fully understand concerns about affordability. Postponing essential infrastructure work, though, is not a solution. That would greatly increase safety risks and costs. Our focus is on operating a safe and reliable heating system, doing critical infrastructure work cost effectively, and helping customers make ends meet through energy-efficiency programs, budget-friendly billing plans and financial assistance."

"What they said was you need to end the program by 2035, and you need to find cost-effective ways to get to the end of the program," said Citizens Utility Board spokesman Jim Chilsen.

An analysis by PIRG found Peoples Gas could spend roughly $5.5 billion on pipe replacement through 2034 for an estimated $60 million in safety benefits — about one penny of safety benefit for ever dollar spent.

"This massive spending has shown no discernible impact on system safety," said Levi Orgas of Illinois PIRG.

Peoples Gas has strongly disputed that analysis, arguing it leaves out significant costs and other factors associated with the work.

The requested hike comes as U.S. households are projected to spend an average of $1,030 to heat their homes this winter, an increase of $82, or 8.7$, over last year, according to the National Energy Assistance Directors Association.  That projected increase is more than two and a half times the rate of inflation.

An administrative law judge is expected to weigh in on the rate hike sought by Peoples Gas on Oct. 5, and recommend to the ICC what should happen next.