Illinois Commerce Commission OK’s Budget Busting Peoples Gas Pipe Program

Illinois PIRG Education Fund

The Illinois Commerce Commission voted Wednesday to approve a plan from Peoples Gas to increase spending on its troubled pipe replacement program. The vote concludes a two year investigation initiated after a 2015 audit found widespread program mismanagement. Commissioner Miguel del Valle, the only remaining Commissioner appointed by Governor Quinn, was the lone no vote. Commissioner del Valle’s term expires next week.
 
On its current course, according to projections from an expert hired by the Office of the Attorney General as part of the investigation, the program will add $500 a year to average gas bills in ten years, double average bills in 20 years, and almost triple average bills in 30 years.

“The Commission failed Peoples Gas customers,” said Abraham Scarr, Director of Illinois PIRG Education Fund. “With today’s vote to ramp up, rather than rein in, the Accelerated Main Replacement Program, Chicagoans will bear the costs of Peoples Gas mismanagement for years to come.” In a rare move, the Commission denied Mr. Scarr’s request to make an oral comment before the Commission. 
 
Peoples Gas began replacing the gas mains that distribute natural gas to Chicago neighborhoods in 1981. In 2010, they were granted permission to accelerate the project, spending more money each year to complete the project sooner. The permission also allowed Peoples Gas to finance the acceleration through a special bill surcharge which allows the utility to forgo the traditional pre-approval process for making large capital investments. 

When first proposed, the accelerated project was projected to cost $2.2 billion, but cost projections quickly ballooned. During the investigation, an expert witness estimated that, without significant reform, the project will cost $9.41 to 10.96 billion. 

“Today, Governor Rauner’s Commerce Commission sided with big business and turned its back on consumers,” said State Representative Will Guzzardi. “The Peoples Gas main replacement program threatens to double or triple our heating bills, and we need to curb the out-of-control costs of this program. If the Commission won’t stand up for the people of Chicago, we may be forced to take action in the General Assembly.”
 
Peoples Gas already spends more than twice as much per mile of pipe replacement than comparable utilities. Peoples Gas has budgeted to spend slightly more on capital costs between 2017-2019 than it did in the entire 1990’s, adjusted for inflation, while only replacing 45% as much pipe as it did in that decade according to analysis by Crain’s Chicago Business.
 
During the investigation, an Economist testified that rapid increase in gas bills would cause affordability problems for hundreds of thousands of customers, including not only low income but also medium income households.
 
“This proposal will put the burden of improvements to the gas main system on the people who can afford it the least,” says Jody Blaylock, Senior Policy Associate with Heartland Alliance. “When families can’t afford heat, it puts their health and wellbeing at risk.”
 
You can the comments Abraham Scarr prepared here.
You can read the public comments of Jody Blaylock here.