Peoples Gas pipe replacement program behind schedule for 19th consecutive quarter

Media Contacts
Abe Scarr

State Director, Illinois PIRG Education Fund

The Peoples Gas pipe replacement program failed to meet its pipe retirement goal for the 19th consecutive quarter, according to a new report filed Tuesday to the Illinois Commerce Commission. The overall program cost to retire each mile of pipe was also over budget for the quarter, as it has been almost every quarter since quarterly reporting began in 2018. These facts undermine recent claims by Peoples Gas that the program is on track to finish by its 2035-2040 target or hit its $8 billion cost estimate.

Peoples Gas charges customers for program costs and associated profits by adding to a monthly surcharge to customer bills. The “QIP” surcharge, approved by the state legislature in 2013, will expire at the end of 2023 unless the legislature extends it. Illinois Attorney General Kwame Raoul and Chicago Mayor Lori Lightfoot recently called to let the surcharge expire, joining Illinois Gov. JB Pritzker, who began calling for an end to the surcharge in 2020. A coalition of more than 40 consumer, environmental and community organizations also support ending the surcharge.

“It’s past time to end the QIP surcharge and restore meaningful oversight to the failing Peoples Gas pipe replacement program,” said Illinois PIRG Education Fund Director Abe Scarr. “Along with the rising cost of gas, the QIP surcharge will be a major contributor to painful home heating bills for Chicagoans this winter.”

The surcharge cost the average Peoples Gas customer more than $15 per month during the third quarter, an amount that made up 18% of the average bill. When approving the surcharge in 2013, legislators were told that Peoples Gas customers would pay a $1.14 monthly surcharge. Customers are now paying more per month than they were expected to pay per year. 

Separate reports released Tuesday showed Peoples Gas customers were collectively $88 million behind on their bills in October. According to the report, one in five Peoples Gas customers were behind on their bills, despite customers using less gas from May through September than they typically will in a single cold winter month. 

Beyond causing financial hardships, the pipe replacement program is increasingly in conflict with Chicago’s climate goals. The city’s recently revamped climate action plan calls for electrifying 30% of residential buildings and 90% of city-owned buildings by 2035, before the overhaul of the Peoples Gas system is complete. The city released its Chicago Building Decarbonization Working Group Recommendations Report in October, including recommendations to “drastically reduce fossil fuel use” and “advance decarbonization for all buildings.”

“It’s time to begin the transition to heating our homes with 100% renewable energy,” continued Scarr. “Instead of effectively addressing the safety risks in its system, Peoples Gas is recklessly pouring billions of dollars into, and forcing consumers to pay for, unnecessary, soon-to-be-obsolete, fossil fuel infrastructure.”

A 2020 engineering study echoed a previous outside audit, finding that the Peoples Gas pipe replacement program was failing to achieve its public safety purpose of rapidly 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.”

Despite this clear record of failure, Peoples Gas is reaping record profits from the program. Halfway through 2022, Peoples Gas had already made nearly $156 million in profits, the same amount it made over the entire year in 2019, which was a record at the time. In its third-quarter report to the Securities and Exchange Commission, parent company WEC once again credited the pipe replacement program for driving increased profits. WEC cited a $6.2 million increase in revenue attributable to the program compared to the same quarter last year. 

Illinois PIRG Education Fund has argued for years that the program is failing to reduce system risk in proportion to the billions of dollars Peoples Gas is spending for two main reasons. First, Peoples Gas is prioritizing an overhaul of its system from low to medium pressure over replacing at-risk pipes. Further, Peoples Gas has chronically mismanaged the program. Access Illinois PIRG Education Fund’s detailed report on the program’s “tragedy of errors” at