Consumer groups rail against Chicago gas utility as state investigation nears end

[November 08, 2024]  By Andrew Adams

CHICAGO — Regulators at the Illinois Commerce Commission are nearing decisions in several high-profile cases that could determine changes to utility bills for millions of Illinoisans.

These include a series of cases that will set prices for almost every Illinois electric customer and a pair of requested rate increases for the state’s two largest private water utilities.

But one of the most intensely debated cases before the ICC involves an investigation into a program at Peoples Gas, the natural gas utility in Chicago. That company has been operating its System Modernization Program, or SMP, to replace older pipes, some of which were installed more than a century ago. The company says replacing them is critical to avoid dangerous safety risks.

But the program has long been the center of criticism from consumer advocates who allege that it has massively overrun its budget and contributed to increasing utility bills.

A report from the Citizens Utility Board released last week found the program could cause rates to double over the next 16 years without cost-cutting intervention, increasing annual costs to customers by $1,200 on average.

The report also found that Peoples Gas customers would incur residual costs from financing the SMP until 2100 – 60 years after the program is set to conclude.

Activists went to the ICC on Thursday, hoping to sway the commissioners into reining in the program, with several citing the report’s findings.

Aria Brown, a student at the University of Illinois Chicago, said she wants the commission to require that pipeline replacement be done through a “targeted program that focuses on their most dangerous pipes.”

Kira Dault, the communications director for the environmental advocacy group Faith in Place, told commissioners Thursday that they should “overhaul” the program as part of a managed transition away from natural gas.

“Peoples Gas has, for decades, been charging customers for its failed pipe replacement program without the expectation of transparency or accountability,” Dault said.

While CUB’s report and efforts from other groups have created buzz around the issue, Peoples Gas outright denies several of the report’s conclusions.

“CUB’s decision to push claims from an out of state, anti-natural gas group — all outside the ICC’s official ongoing review of our safety program — is remarkable and disappointing,” Peoples Gas spokesman David Schwartz said in a written statement.

Schwartz also noted that CUB is not participating in the ongoing investigation into the program underway at the ICC.

State investigation

Meanwhile, the investigation into Peoples Gas’ pipeline replacement program, which the ICC ordered one year ago this month alongside a near-total pause in program-related spending, is set to conclude in January.

Two weeks ago, the groups making legal arguments in that case – including Peoples Gas, consumer advocates and government entities – submitted recommendations for a “final order,” which will determine how the SMP will be managed moving forward.

Kira Dault, communications director at the environmental group Faith in Place, speaks at a meeting of the Illinois Commerce Commission in downtown Chicago. (Capitol News Illinois photo by Andrew Adams)

Illinois PIRG, a consumer advocacy group that has long criticized the SMP, as well as the state’s attorney general and the city of Chicago say the investigation should continue past its initial deadline.

The AG’s office argued that the record of evidence presented in the investigation wasn’t enough to determine whether Peoples Gas is effectively prioritizing replacing the riskiest pipes – in other words, the ones most likely to fail and leak natural gas. The city of Chicago also pointed to “serious deficiencies” in the evidentiary record and recommended further investigation.

Peoples Gas, meanwhile, rejected these claims and instead argued it should be allowed to continue its work without what it called a “duplicative and administratively burdensome” second phase of investigation.

The company also claimed its preferred option for how to manage the program would result in $5.8 billion in lower costs than the option preferred by PIRG, the attorney general and the city, an argument Chicago called a “strawman” of their position.

From here, an administrative judge will propose a final order in the case and the parties involved will have a chance to respond over the next few weeks before the commission accepts that order or edits it early next year, ending the investigation.

Other ICC matters

While the ICC considers this investigation, it is also considering several other cases that could impact utility bills for millions of Illinoisans.

Commissioners were set to announce a decision in the ongoing water rate case from Aqua Illinois, a private utility which serves around 277,000 people in its 14-county service territory but held the case for further consideration. That decision is still expected in the coming weeks.

Illinois American Water, the state’s largest private water utility, also requested a rate increase this year and is expected to present oral arguments later this month before the ICC decides whether to grant the company its increase in December.

Those cases have drawn outrage from some customers, mostly in northern Illinois, who say the companies already charge too much for their services.

On Thursday, ICC commissioners agreed to hear oral arguments in a case relating to Commonwealth Edison. The case focuses on the company’s plan to modernize the electric grid over the coming years and a related plan for setting rates.

That case, which follows the commission unexpectedly rejecting the company’s initial attempt at such a plan, will help determine electric rates through 2027. Under ComEd’s initial filing in the case earlier this year, customers in northern Illinois would spend about $92 more per year on electricity by 2027.

Ameren Illinois is going through a similar proceeding with a similar plan for grid modernization. Decisions in both cases are expected in the spring.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.