Peoples Gas accused of using bogus safety threat to justify $11 billion upgrade

Peoples Gas was accused Wednesday of using bogus threats of Boston-style gas line explosions to justify an $11 billion system modernization program squeezing Chicago consumers who already pay 80 percent more for gas than suburbanites.

The City Council has no power over utilities and no ability to order Peoples Gas to slow its plans to: replace natural gas pipes; convert from low-to-medium pressure; install redundant safety valves; and move meters outside to provide emergency access for first-responders.

That power lies with the Illinois General Assembly, the Illinois Commerce Commission and Gov. J.B. Pritzker, who appoints Commerce Commission members.

But Ald. George Cardenas (12^th), chairman of the City Council’s Committee on Health and Environmental Protection, said he hopes the resolution approved at Wednesday’s long-stalled hearing will shine the light on the issue and turn up the heat on the Legislature, the governor and the ICC.

“Our seniors, the most vulnerable of our population, can’t make ends meet. Higher property taxes. Higher utility rates. Higher water rates. To no end. Their Social Security checks can’t cover those increases fast enough,” Cardenas told a news conference before Wednesday’s hearing.

“What we’re facing now is a deluge of people coming to … offices like mine saying, `I can’t pay the bill. Can you help me? Who can help me?’ It’s sad to see seniors [who], not only … can lose their homes but now, can’t even heat their homes.”

Bryan McDaniel, director of governmental affairs for the Citizens Utility Board, accused Peoples Gas of using “propaganda” to build a case for the modernization plan.

“They start every conversation with the Legislature [by talking about] safety, safety, safety. They imply the city’s gonna blow up if they’re not given their money. The problem with that argument is, it’s simply untrue. This is about profits, profits, profits,” McDaniel said.

McDaniel noted that since a 2015 ICC audit uncovered, as he put it, “rampant mismanagement,” the projected cost of the program has nearly tripled — from $4.5 billion to $11 billion.

More recently, the president of Peoples Gas was quoted as saying he has no idea how much the program will ultimately cost.

“This is unaffordable for people. These bills are already unaffordable for people. And it’s only gonna get worse,” McDaniel said.

Abe Scarr, director of Illinois Public Interest Research Group, said the pipe replacement program is a “poorly-designed, mismanaged, bad deal for Chicago” that the ICC refused to rein in during the administration of former Gov. Bruce Rauner.

“All the evidence in the form of hazardous leak rates shows that the program is failing to address public safety risks. That’s the first point. The second is that they’re spending too much money too fast. And this is what’s driving the unaffordable bills,” Scarr said.

“Experts predict that average customers will be paying over $65 every month just for this program in 2040 if it continues on its current path.”

Danisha Hall, director of corporate communications at Peoples Gas, argued that the modernization program “can’t be slowed down” because it would add $1 billon to the cost for every ten years the timetable is extended and put public safety at risk.

“There was an explosion outside of Boston. This is not a fear factor game. This is serious. We don’t want to take that risk. We’re not willing to on our watch,” Hall said.

When an over-pressurized gas line triggered a series of explosions and fires last fall in Boston, one person was killed and dozens were injured. Eighty homes were destroyed.

Peoples Gas “went into crisis mode” and examined “all of the elements that were low-pressure” in its current system, she said.

“Low-pressure systems rely on humans to keep things regulated,” Hall said. The new medium-pressure system will have regulators at each customer’s location, she added. “That way, we don’t have to rely on humans. They will shut off the gas in the event of an over-pressure incident automatically.”

Hall acknowledged escalating costs pose a hardship to Chicago consumers, particularly those on fixed incomes.

But, she said, “This program is not creating that hardship. The average cost-per-customer in 2018 for the program was $6-a-month.” Over time, Hall pegged the cost at “two percent-a-year” — not the $65 per month consumer advocates claimed.

“Labor costs in the city, permitting costs in the city, the actual techniques that we have to use for our construction costs a lot of money. In order to ensure the stability of this program, we need a funding mechanism to ensure that we can continue at a stable pace,” she said.