State regulators on Thursday rejected most of a request from Peoples Gas to tack $7.9 million onto a record-breaking rate hike for emergency work tied to the utility’s chronically over-budget, behind-schedule pipeline replacement program.
The Illinois Commerce Commission voted to add just $1.6 million “out of an abundance of caution” to the $303 million hike approved for Peoples Gas last fall, commission Chairman Doug Scott said during a Springfield meeting.
Earlier this year, the utility asked for a rehearing to allow additional spending on the controversial pipeline project, which was halted pending an investigation by the commission, as estimated costs have ballooned from $2 billion to $11 billion since 2007.
Average residential bills have gone up about $6 per month this year under the rate increase that took effect in January. The reduced increase approved Thursday will tack on another 15 cents per month, according to Peoples Gas, whose full request would have added 60 cents per month.
Scott said the commission’s decision “should in no way prohibit the company from performing necessary emergency work to maintain a safe and reliable system.”
But Peoples Gas spokesman David Schwartz warned the commissioners’ decision “risks the continued safety and reliability of Chicago’s energy system,” and said the utility would file an appeal.
The rejection “will harm our future efforts to address critical needs in the system,” Schwartz said in an email. “The commission’s staff — whose job it is to audit utilities and provide technical advice to the commission — confirmed that Peoples Gas emergency and safety work is necessary to comply with federal pipeline safety requirements and keep Chicago safe.”
Consumer advocates hailed the decision as the latest rebuke of the “bloated” pipeline program, which has been defended by labor unions.
“We thank Chair Scott and commissioners for once again protecting Peoples Gas customers and restoring much-needed utility accountability,” Abe Scarr, director of the Illinois Public Interest Research Group, said in a statement. “Not only did Peoples Gas fail to justify yet another rate hike, this proceeding provided further evidence that the Peoples Gas pipe replacement program is profoundly troubled, reinforcing why the commission’s investigation is critically important.”
Sarah Moskowitz, executive director of the Citizens Utility Board, said regulators “saw through the smokescreen” put out by the utility.
“With this decision, the ICC again displayed the kind of regulatory scrutiny needed to protect Illinois consumers from excessive costs,” Moskowitz said in a statement. “Even with today’s ruling, Chicagoans remain engulfed in an affordability crisis wrought by the Peoples’ indiscriminate spending on pipe replacement.”
The commission’s probe of the pipeline program is expected to be completed early next year.
