Peoples Gas seeks record $402 million rate hike next year

The utility’s filing with the Illinois Commerce Commission marks its first rate increase proposal since 2014 — but it’s the biggest one the utility has sought, consumer advocates say.

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Peoples Gas customers could see an increase on their bills beginning early next year if a requested rate hike is approved.

Peoples Gas customers could see an increase on their bills beginning early next year if a requested rate hike is approved.

Ashlee Rezin/Sun-Times file

Chicago residents could see their monthly natural gas bills rise by an average of $11.83 starting next year if state regulators approve rate hikes totaling $402 million as requested Friday by Peoples Gas. 

The utility’s filing with the Illinois Commerce Commission marks the first rate increase proposal from Peoples Gas since 2014 — but it’s the biggest one the utility has ever asked for, consumer advocates say. 

Peoples is asking for permission to raise rates by $195 million and tacking on $207 million more for delivery costs to offset a $15-per-month surcharge that expires at the end of this year. 

That surcharge has funded a pipe replacement program that could end up costing more than $8 billion by the time it wraps up in 2040, nearly six times what the utility originally estimated in 2007. 

The proposed hike comes as homeowners have already seen heating bills shoot up this winter due to sharply rising natural gas costs around the world. 

With the requested increase, a household that paid about $867 in delivery charges in 2022 would end up paying about $1,009 next year, according to slides Peoples shared with consumer groups before submitting paperwork with the commerce commission. 

Despite the record increase request, Peoples says it’s “not expected to increase the typical customer’s bill” because natural gas prices are forecast to stabilize and dip through 2024. 

And since customers have already been paying the surcharge amount that makes up much of the total increase, the bottom line on bills for most of its 878,000 Chicago customers will remain “largely flat,” the utility claims. 

“The filing ensures Chicagoans will continue to have the safe, reliable, environmentally sustainable energy they depend on — especially when temperatures drop to zero and below as they did during the recent holiday cold snap,” the utility said in a statement. 

Abe Scarr, director of the Illinois Public Interest Research Group, called the end of the $15-per-month surcharge a “victory” for customers, but he urged state regulators to hold Peoples accountable for “its failing pipe replacement program.”

“Rather than approving the largest gas utility rate hike in Illinois history, the Illinois Commerce Commission should take this opportunity to limit the rate increase and rein in the out-of-control utility spending driving up gas bills in Chicago,” Scarr said in a statement. “The Peoples Gas pipe replacement program is mismanaged, failing to address safety risks, unaffordable for broad swaths of Chicago and absurd in the face of climate change.”

The commerce commission has the rest of this year to decide on Peoples’ request, but that agency has a full docket of other rate hike requests covering most of the state. 

North Shore Gas — which along with Peoples is owned by Milwaukee-based WEC energy — requested an $18.5 million rate hike, which would amount to about $6 more per month for its 164,000 north suburban customers. 

And Nicor, which delivers gas to more than 2 million people in the suburbs and the rest of northern Illinois, requested a $321 million rate increase earlier this week. That would come out to about $9.28 more on the average monthly bill. 

“Nicor Gas realizes the impact any rate increase can have on customers and does not make this request lightly; however, this rate increase is necessary to run our business due to inflation and rising global impacts that continue to affect our operating and maintenance costs,” a spokesperson said. 

In a statement shortly after Peoples requested a rate hike, the Citizens Utility Board said “[f]or the second time this week, we’re getting slammed with a record-high rate hike request for a dirty, unaffordable fossil fuel. … We need strong policy to help Illinois consumers transition to cleaner and more affordable energy sources.”

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