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Regulators order Peoples Gas to repay $7.2 million to customers

The utility serving 873,000 Chicago customers overcharged for system improvements during 2015, the Illinois Commerce Commission says.

The Illinois Commerce Commission said Thursday it has ordered Peoples Gas to refund $7.2 million to customers for excessive charges the utility incurred in 2015 to replace aged pipes and for other infrastructure work.

Of the total settlement, $3.5 million will be applied as a one-time credit on customers’ bills. Peoples Gas said the average refund will be $4 and will appear on bills within 90 days.

Another $3.5 million will be set aside to help low-income customers get service reconnected and have amounts owed to Peoples Gas forgiven.

The utility also was ordered to return $270,000 to customers in the form of a lower surcharge for its system work. The ICC said it is still investigating costs for the program from 2016, 2017 and 2018.

In a written statement, Peoples Gas noted that the 2015 costs were incurred by its previous owner, Integrys Energy Group: “Since acquiring Peoples Gas in mid-2015, WEC Energy Group has worked closely with the ICC and its auditor to make substantial improvements in the management and efficiency” of its System Modernization Program, or SMP, the company said. It said the credit will appear on bills as “2015 SMP Adjustment.”

The program calls for Peoples Gas to replace 2,000 miles of old mains, upgrade 300,000 customer-service lines and relocate gas meters from inside buildings to the outside over 20 years. The company serves 873,000 customers, all in the city of Chicago, not the suburbs.

The settlement requires the utility to permanently remove $7 million from its rate base used in calculating delivery charges. In addition, the company agreed not to report to credit agencies any late customer payments through December 2028.

Finally, the company must continue to solely fund the Share the Warmth program, which provides grants of up to $200 to customers having trouble paying their gas bill. A requirement that customers make a matching payment to get a grant was dropped last year.

The Illinois attorney general’s office and the Citizens Utility Board worked with the ICC staff in building the case against Peoples Gas. They identified certain payments to contractors as being “imprudently incurred.”