Consumer advocates want to slash millions from Peoples Gas' proposed $202 million rate hike

Consumer advocate groups Illinois PIRG and Citizens Utility Board said Peoples Gas' proposed $202 million rate hike is "bloated" and proposed cuts to what they called unwarranted costs Wednesday.

At a Wednesday morning news conference, CUB and PIRG said they will be analysis later this week with state regulators recommending reductions to the hike that total at least $137 million, or more than 66%.

The groups said much of the additional costs are from Peoples Gas project to replace aging iron pipes. Last year the Illinois Commerce Commission ordered the utility to retire about 1,000 miles of iron pipes by the end of 2034, but the consumer groups say Peoples has doubled down on their replacement-only approach. On expert brought by Illinois PIRG estimated the utility's current plan could raise customers' bills by an average of $581 annually.

CUB and PIRG said adopting one of various proposed viable alternative replacement plans could save customers $2 billion.  They said the rate hike could be cut by $38.8 million and said the ICC should make the company's ability to charge customers for pipe replacement and improvement work contingent on them using a plan consistent with regulators' ordered reforms.

The groups also argued the expenses proposed in Peoples' rate hike fall short of the standard Illinois regulatory law allows for utilities recouping justifiable costs.

The groups argued regulators should reduce $42.8 million in return on equity and capital structure, saying Peoples Gas padded their rate hike proposal with "an excessive margin of profit it would collect on its investments."

CUB and PIRG also said $14.4 million in incentive compensation for corporate executives should be struck from the rate hike, calling it "a kind of Trojan Horse that rewards utility bosses with a personal financial jackpot in the guise of serving a public need."

Peoples' proposed rate hike has been under fire since it was filed in January. Consumer advocacy groups called it a cash grab and Chicago City Council members said it seemed "excessive."

The proposal comes just three years after the state approved a $303 million rate hike for Peoples Gas, which was the largest in Illinois history.

Peoples Gas said in a statement, "We are reviewing the new filings and will respond in detail as part of the formal ongoing rate review process with the ICC and other stakeholders."

The statement continued to say the requested rate hike reflects the "mandate made last year by the ICC" regarding the pipe replacement program, and argued reducing funding would slow the work. They also said it reflects the impact of inflation.

Peoples Gas claimed Chicago home heating bills are currently lower than other major U.S. cities and that is expected to remain the case with the proposed rate hike's predicted $10 to $11 increase to customer bills monthly.