Peoples Gas’ Bloated Pipe Replacement Program Leads to High Gas Bills in Chicago
In mid-November, Peoples Gas released its third quarter report for 2020 detailing the ongoing status of its massive pipe replacement program. One takeaway from the report is that the Peoples Gas pipe replacement program is still behind schedule and over-budget, as it has been every quarter in the almost three years it has been making quarterly reports.
In mid-November, Peoples Gas released its third quarter report for 2020 detailing the ongoing status of its massive pipe replacement program. Among other things, it included updated numbers on how much Peoples Gas charges its customers for this program.
Peoples Gas Pandemic Response Indicates Deeper Issues
One takeaway from the report is that the Peoples Gas pipe replacement program is still behind schedule and over-budget, as it has been every quarter in the almost three years it has been making quarterly reports. Of course, the pandemic has impacted the volume and type of work the company can complete, but the scramble to adjust their work plans revealed a deeper problem. The pipe replacement program is not operating with a long-term plan or credible cost estimate, an issue that we detail in our response to the previous quarterly report.
Ballooning Cost Leads to Higher Gas Bills for Chicago
Seven years ago, Peoples Gas was one of three Illinois gas utilities that received special permission from the state to charge customers through a surcharge for projects to address urgent safety issues, like fixing old, leaky pipes. However, Peoples Gas leak rates have not gone down in proportion to the billions of dollars it has spent on its pipe replacement program — costs passed directly on to its customers.
When the legislature approved the surcharge, it was told that the average additional charge on customer bills would be $1.14. Between July and September this year, that average monthly charge is over $11.50, independent of other distribution charges and regardless of how much gas a customer uses. That was nearly 20% of the average customer’s total gas bill.
While for some people, it’s “only a few bucks,” this steady increase in cost has led to an affordability crisis for an essential utility — one that heats millions of homes during Chicago winters.
Peoples Gas and Pandemic Utility Disconnections
As part of an agreement with consumer advocates reached early in the pandemic, utilities are also releasing monthly credit and collections reports, which include data on disconnections, late-payments, and shut off notices.
Calculations from one of these reports demonstrate the gas affordability crisis in Chicago. The latest data, collected from the month of October, shows that Peoples Gas sent late-payment fees to more than 26% of all its residential customers. That is, one quarter of Chicago gas customers were late or otherwise unable to pay their gas bills from the previous month of September — a month warm enough that most of us are not using gas to heat our homes.
Some of this is a logical result of the financial struggles from the pandemic. By comparison, ComEd sent late-payment notices to 17% of their customers during the same period. That figure is also quite high, but demonstrates how Peoples Gas customers are facing particular affordability challenges, again, during months when many are using little to no gas.
We’re working to rein in the overspending that’s not addressing real public safety risks, while also placing large affordability burdens on many Chicagoans. Take action here, to tell your legislators to rein in overspending.