Chicago utility pushes back against state oversight, asks for further rate increase

[December 09, 2023]  By ANDREW ADAMS
Capitol News Illinois
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CHICAGO – Chicago utility Peoples Gas is requesting a multimillion-dollar bump to its already record-high rate increase approved by regulators last month.

In November, the Illinois Commerce Commission forced a yearlong pause on the company's controversial pipeline replacement program while it investigates whether the program adequately prioritizes replacing high-risk natural gas pipes throughout Chicago, where the utility serves about 875,000 customers.

The company alleged in a filing with the ICC last week that a “misunderstanding” in last month’s ruling will prevent the company from conducting emergency repairs and other “critical” work.

Consumer and environmental advocates have pushed back strongly against the request, saying that it is an attempt to overturn the ICC’s decision without going through the proper appeals process.

The company is now seeking “expedited clarification” on what work it is allowed to continue doing and what work must be stopped. Peoples Gas claims that in pausing around $265 million of work spread over several years, the ICC stopped the company from conducting critical infrastructure work that is beyond the scope of the program that is under investigation.
 

Peoples Gas is now seeking an additional $9.1 million in annual revenue on top of the $303 million increase that regulators approved in November.

Last month’s ICC decision, which came in the form of a “final order,” cut Peoples Gas’ initial rate increase request by 25 percent. That, along with the decision to investigate the company’s pipe replacement strategy, drew praise from consumer and environmental advocates.

But the decision to pause some infrastructure spending while the state investigates the company’s practices was met with strong pushback from both the company and the unions that represent its workers. They cite both the possible economic and safety impact of the decision.

In a statement, Peoples Gas said that “several hundred jobs will likely be lost” because of the ICC’s actions.

Ed Maher, a spokesperson for the International Union of Operating Engineers Local 150, said the decision could affect up to 1,000 workers, including 200 members of his union.

“It leaves an entire workforce without a way to feed their families for 12 months,” he said.

Maher also said the ICC “overstepped any kind of precedent” and the paused work could create safety risks.

“The commissioners are playing politics with peoples’ jobs, peoples’ heat and peoples’ safety,” Maher said.

AFL-CIO President Tim Drea wrote a letter to the ICC commissioners on Monday in which he called their decision to pause the pipeline replacement program “troubling.”

Pastor and environmental activist Veronica Johnson speaks to protestors at an Oct. 19 rally to pressure the Illinois Commerce Commission into rejecting utilities’ requested gas rate increases. (Capitol News Illinois photo by Andrew Adams)

Consumer advocates, meanwhile, have pushed back against some of these claims.

Sarah Moskowitz, the head of the Citizens Utilities Board, called Peoples Gas’ request “irresponsible.”

“It is outrageous for Peoples Gas, which has been rolling in six straight years of record profits and just received a record rate hike, to claim that it suddenly doesn’t have the resources to conduct repairs to its system and pay its workers,” she said in a statement.

CUB filed a formal response to Peoples Gas’ request on Wednesday, along with several other entities that were involved in the case leading up to last month’s decision. This includes groups like AARP Illinois and the Illinois Attorney General.

In a response filing to Peoples Gas’ motion, the staff of the ICC criticized the utility on procedural issues as well as on its claims that it can’t perform critical repairs without the additional rate hike.

“Not only is the company’s interpretation of the final order incorrect, the company also fails to acknowledge that it is, in fact, obligated pursuant to statute to ensure both public safety and reliability,” ICC staff wrote Wednesday.

Another filing, submitted on behalf of several other advocacy groups, criticized Peoples Gas for withholding the evidence the company is now citing when it went through the formal rate case proceeding.

The groups, which include the Environmental Law and Policy Center and Illinois PIRG, further argue that last month’s order does not prevent the utility from conducting safety-related work and that the company’s motion is an “unprecedented attempt to coerce” the ICC into modifying its decision.

Abe Scarr, head of Illinois PIRG and a longtime critic of Peoples Gas’ pipeline replacement program, echoed other advocates’ critiques and called ICC’s recent decisions a “rude awakening for the utilities.”

Last month, the ICC issued decisions in four gas rate cases, cutting each utility’s requests by 25 to 50 percent.

“There has clearly been a major shift in how the Illinois Commerce Commission operates,” Scarr said. “You can tell in all of the rate cases.”

In addition to potentially responding to Peoples Gas’ latest motion, the ICC is expected to issue a decision in two ongoing electric rate cases next week. Those cases have the potential to increase bills for Ameren Illinois and Commonwealth Edison customers by hundreds of dollars per year over the next four years.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.