Peoples Gas rate hike should be cut in half, ICC regulatory judges say

Less than half of a $144 million rate hike requested by Peoples Gas is justifiable, according to a ruling this week by state administrative law judges that will affect how much Chicago residents pay on their heating bills this winter.

Instead, staffers for the Illinois Commerce Commission on Tuesday recommended that the panel should allow Chicago’s natural gas utility a collective increase next year totaling $66 million.

Peoples Gas initially sought a hike of $202 million to wrap up work on its beleaguered pipeline replacement program that regulators have ordered the company to scale back after years of running over budget and behind schedule.

Facing sweeping criticism from consumer advocates, City Council members and Illinois Attorney General Kwame Raoul’s office, the utility — owned by Milwaukee-based WEC Energy Group, which reported a $1.6 billion profit last year — lowered its request over the summer.

Regulators on the commission are expected to issue a final ruling next month to conclude the quasi-judicial process that determines how much utilities are allowed to charge customers.

A $144 million rate hike would raise the average residential bill by as much as $8 starting in January. It wasn’t immediately clear what impact a $66 million hike would have.

Regulators granted Peoples Gas a hike of more than $300 million in 2023 when they clamped down on the pipeline replacement program.

“We are reviewing the administrative law judges’ recommendation,” a Peoples Gas spokesman said in an email. “As their proposed order states, our work to retire 1,000 miles of old pipe is “a binding safety mandate — not… a discretionary program whose costs can be reduced without serious consequences.

“We look forward to continuing to work with the Illinois Commerce Commission to meet its mandate of retiring old energy pipes nearing the end of their useful lives.”

Abe Scarr, director of the Illinois Public Interest Research Group, said the law judges’ proposed order “gets some important things right” on reining in the pipeline program, but “instead of acting on these findings, the order punts to a future investigation.”

“It’s time to end the Peoples Gas pipe replacement program as we know it, and redirect the utility’s safety spending on the primary safety risks to its system,” Scarr said in a statement. “After more than a decade of failed pipe replacement spending, it’s time for a new approach that properly prioritizes safety, doesn’t unnecessarily raise rates, and facilitates the transition to safer, cleaner energy.”

Consumer watchdogs at the Citizens Utility Board say “more fat can be trimmed.”

“This is a step in the right direction, but we urge the ICC to go even further than the proposed order, at a time when it has never been more crucial for regulators to combat unwarranted utility costs,” CUB General Counsel Eric DeBellis said in a statement. “In recent years, Commissioners have proven vigilant in cutting gas rate hikes beyond the levels recommended by proposed orders, and we hope they exercise that prudence again in this Peoples Gas case by lowering consumer costs further.”