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Peoples Gas released its first quarter report Friday on its troubled pipe replacement program. The report shows that the average Peoples Gas customer paid a $12.04 surcharge for the program in March -- more than ten times the $1.14 per month the legislature was told customers would pay when it passed the surcharge law in 2013. Gas utilities had asked the legislature for the same automatic “formula” rates ComEd won at the beginning of its bribery scheme, but instead won the surcharge, which similarly allows for automatic bill increases and decreased regulatory oversight.
Gov. JB Pritzker recently introduced energy legislation that would end both formula rates and the surcharge.
"It's time to end automatic gas utility surcharges forcing Chicagoans to pick up the tab for this failing program and shielding Peoples Gas from accountability,” said Illinois PIRG Director Abe Scarr. "Any energy bill that passes this May must end automatic gas utility surcharges.”
The program is behind schedule and over budget for the thirteenth quarter in a row, every quarter since the company began reporting quarterly in 2018. Peoples Gas spent $44 million on its pipe replacement program over the first three months of 2021 and replaced 7 miles of gas mains at a cost of $6.3 million per mile retired. That compares to Peoples Gas’ plan for the quarter: spending $49 million to replace 19 miles of pipe at a cost of $2.6 million per mile retired. In contrast, over the entire year in 2006, Peoples Gas spent $50 million in 2021 inflation-adjusted dollars to replace 47 miles of main at a relatively scant $1 million per mile retired.
The program is driving a home heating affordability crisis in Chicago. While all major utilities have seen increases in debt this year because of the pandemic, the stark differences between Peoples Gas and others highlights the severity and chronic nature of its affordability problems. For example, Peoples Gas customers with debt were collectively $146.5 million behind on their bills as of January 2021. That is $26 million more than ComEd customers, despite ComEd having roughly 2.9 million more residential customers.
In August, Gov. JB Priztker first 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. The policy change is supported by a coalition of more than 30 consumer, environmental, and community organizations.
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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