Cold snap a reminder of unnecessarily high Chicago gas bills

Last week in Chicago, temperatures were in the single digits in the worst cold snap since 2019. [1] With these low temperatures, Chicagoans take refuge inside, forced to rely on heat. And as long as the state relies on fossil fuels, city residents rely on Peoples Gas. This month’s heating bills are sure to bear the mark of this cold snap. But what happens when Peoples Gas charges more than a substantial portion of its customers can pay?

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Sabrina Clevenger
Associate, Illinois PIRG

Author: Sabrina Clevenger

Associate, Illinois PIRG

 

Started on staff: 2020
B.S., Yale University

Sabrina works on consumer issues for both Illinois PIRG and U.S. PIRG. Sabrina enjoys hiking, writing, and spending time around a campfire with friends.

Last week in Chicago, temperatures were in the single digits in the worst cold snap since 2019. [1] With these low temperatures, Chicagoans take refuge inside, forced to rely on heat. And as long as the state relies on fossil fuels, city residents rely on Peoples Gas. 

This month’s heating bills are sure to bear the mark of this cold snap. But what happens when Peoples Gas charges more than a substantial portion of its customers can pay? After the Illinois General Assembly passed a law to allow gas utilities to assess customers a surcharge, known as Rider QIP, in 2013, supposedly to address urgent safety repairs, ballooning gas bills have become a norm in Chicago. The Rider QIP surcharge, claimed to add an additional $1.14 per month [2] at the time legislators approved the special permission, cost the average customer $11.67 over the last three months of 2020 — more than ten times higher. [3] Even energy or budget-conscious customers with low gas usage cannot avoid this fixed charge, which, along with other fixed charges can bring a customer’s bill close to $50 before using a therm of gas [4]. These unavoidably high charges have contributed to a staggering rate of late or unpaid bills in the city: Peoples sent disconnection notices to 15% of customers in 2018. [5] Without action, and when historically low gas prices inevitably rise the affordability crisis will only deepen.

It would be one thing if the cause of rising bills were a worthwhile and well managed project — unfortunately, that is far from the case. The Peoples Gas pipe replacement program has been terribly mismanaged and is failing to achieve its purported public safety purpose. Rider QIP was originally sold as for necessary safety repairs, but the Peoples Gas pipe replacement program is failing to prioritize necessary repairs and instead investing in modernization objectives that may only be finished after the infrastructure becomes obsolete. [7] Even after pumping annual budgets with ratepayers’ money through the surcharge, Peoples Gas did not report a notable reduction in gas leak rates. In fact, the rates remained largely the same. [8] The pipe modernization is simply not good value for Chicagoans’ money. 

The pipe replacement program has also been plagued by mismanagement. An independent audit report found Peoples management did not have a clear grasp on “(a) likely overall program costs, (b) likely program duration relative to targeted completion of leak-prone pipe replacement by 2030, and (c) the reasons why leak rates have not fallen significantly after four years of accelerated replacement of cast iron and ductile iron mains.” [9] As we documented in our 2019 report, Peoples Gas failed to implement audit recommendations and continues to operate its program without a long-term plan or credible cost estimate. [10]

The weather rarely responds to human needs: Chicago will continue to barrel toward arctic temperatures no matter how badly its residents crave outdoor walks. But Peoples Gas, and its regulator, the Illinois Commerce Commission, must answer to the customers who depend on its essential service. Unfortunately, Peoples Gas has so far avoided accountability, and when the Commission had the opportunity to reform the pipe replacement program in 2017, it failed to act, claiming the 2013 law tied its hands. [11] 

This is why the Illinois General Assembly needs to act. The Heating Affordability and Utility Accountability Act would sunset the gas surcharge in 2021 rather than its currentend date in late 2023. This is a necessary step toward accountability and affordability. 

As Chicagoans face the frigid week ahead, it is imperative to continue interrogating Peoples Gas— its increasing bills, its corporate mismanagement, and its future in Illinois. We cannot let another cold quarter pass without pushing the Illinois General Assembly to hold Peoples Gas accountable. Contact your legislators here. 

[1] Chicago Tribune, Worst cold snap in 2 years to freeze Chicago over weekend after cold front moves in starting Thursday night

[2] Floor Debate, 98th Illinois General Assembly, 64th Legislative Day, 156.

[3] Illinois PIRG, Year-end report: average Peoples Gas customer paid more than $130 in 2020 for pipe replacement program 

[4] Crain’s Chicago Business, Chicagoans to pay over $4 a month for neighbors' unpaid gas bills 

[5] Crain’s Chicago Business, Peoples Gas blows the pipe-replacement budget again 

[6] Crain’s Chicago Business, A lot of Chicagoans late on heating bills—from summer 

[7] Chicago Tribune, Peoples Gas is spending billions to replace miles of aging pipe below Chicago by 2040. But will natural gas be obsolete before it’s complete?

[8] Illinois PIRG, Peoples Gas Engineering Study Ignores the Tough Questions 

[9] Illinois PIRG, Tragedy of Errors, 6

[10] Illinois PIRG, Tragedy of Errors, 6

[11] Illinois PIRG, Tragedy of Errors, 46-47

Sabrina Clevenger
Associate, Illinois PIRG

Author: Sabrina Clevenger

Associate, Illinois PIRG

 

Started on staff: 2020
B.S., Yale University

Sabrina works on consumer issues for both Illinois PIRG and U.S. PIRG. Sabrina enjoys hiking, writing, and spending time around a campfire with friends.