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Year-end report: average Peoples Gas customer paid more than $130 in 2020 for pipe replacement program

Momentum building in Springfield for action to end bill surcharge
For Immediate Release

Peoples Gas released its fourth quarter report Tuesday on its troubled pipe replacement program. It shows that the average customer paid $11.67 per month over the fourth quarter -- more than ten times the $1.14 per month the legislature was told average customers would pay when it passed a law in 2013 allowing Peoples Gas to charge customers a surcharge to recover costs for the program. Over the course of the year, the average customer paid more than $130, which is 11 percent of their total bill, toward the troubled program.

"The Peoples Gas pipe replacement program is poorly designed, mismanaged and an all-around bad deal for Chicago," said Illinois PIRG Education Fund Director Abe Scarr. "For a project spanning decades, falling behind schedule or going over budget any one quarter or year is not necessarily a sign of failure, but doing so every quarter is. Forcing Chicagoans who just want the heat to come on when it’s cold to pick up the tab for this program is unacceptable."

The program is behind schedule and over budget for the third year in a row. Peoples Gas spent $280 million on its pipe replacement program over 2020 and replaced 51.3 miles of gas mains at a cost of $5.5 million per mile retired. In contrast, in 2006, Peoples Gas spent $49 million in 2020 inflation-adjusted dollars to replace 47 miles of main at a relatively scant $1 million per mile retired. 

In August, Gov. JB Priztker called to end the surcharge Peoples Gas is using to recover costs for the program. That followed calls from Mayor Lori Lightfootfoot and the Chicago City Council for the state to take action. In the coming weeks, a coalition of more than 30 organizations and state lawmakers will re-file legislation to end the surcharge ahead of schedule.

An engineering study released last year echoed previous outside reviews of the program, finding that it was failing to achieve its purported purpose of protecting public safety by replacing pipes at risk of failure. The study concluded that the program “has not coincided with a noticeable reduction in pipeline failure rates -- particularly in the last decade."

Illinois PIRG has argued for years that the program is failing to reduce system risk in proportion to the billions of dollars Peoples Gas is spending. The reason? Peoples Gas is prioritizing an overhaul of its system from low pressure to medium pressure over replacing at-risk pipes. Access Illinois PIRG Education Fund’s detailed report on the program at: https://illinoispirg.org/feature/ilp/tragedy-errors

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