Illinois PIRG calls on utility regulators to fix failed Peoples Gas pipe replacement program

Consumer group calls for focused, transparent ‘safety-first’ approach

CHICAGO – Illinois PIRG is urging utility regulators at the Illinois Commerce Commission (ICC) to require Peoples Gas adopt a more rigorous and transparent risk management methodology to guide its pipe replacement program. In a legal brief filed Tuesday as part of a formal investigation into the troubled program, the consumer group argues that doing so is critical to ensure Peoples Gas cost-effectively addresses the safety risks posed by aging iron gas pipes throughout Chicago.

“Peoples Gas is forcing Chicagoans to shoulder higher gas bills for decades to pay for its failing pipe replacement program, but refuses basic transparency and won’t even commit to ensuring its billions of dollars of spending is cost-effective,” said Illinois PIRG State Director Abe Scarr. “It’s an absurd position that should be rejected by the Illinois Commerce Commission.” 

Expert witnesses working on behalf of Illinois PIRG identified multiple fundamental errors in the methods Peoples Gas has used for years to prioritize unsafe pipes for replacement. These errors help explain how Peoples Gas has spent billions of dollars, leading to the largest gas utility rate hike in Illinois history, yet failed to achieve its public safety goals. 

Illinois PIRG’s expert witness also identified flaws in the new risk management model Peoples Gas claims it will implement by December. Peoples Gas refused to answer basic questions about its new methodology and stated that it will not be used to determine the cost-effectiveness of pipe replacement projects. 

Illinois PIRG, the Office of the Attorney General and City of Chicago all argued in their briefs that Peoples Gas has failed to demonstrate that the ICC should allow it to continue its practice of combining at-risk pipe replacement with a systemwide change from low to medium pressure. All three asked the ICC to further investigate this and other threshold questions about the future of the program.

Illinois PIRG made nine recommendations to the ICC in its brief, including directing Peoples Gas to consider non-pipe alternatives to pipe replacement, such as lining pipes with cured in place lining or electrifying homes.

“The Illinois Commerce Commission should take this opportunity to overhaul the Peoples Gas pipe replacement program to reduce costs and better ensure public safety,” concluded Scarr. “Doing so will allow us to stop wasting money on unnecessary fossil fuel infrastructure and instead work toward safer, cleaner ways to heat our homes.” 

Illinois PIRG Education Fund’s 2019 report, Tragedy of Errors, documented how Peoples Gas has failed to properly prioritize the replacement of risky iron pipes in its system for over four decades. The modern version of the program, the Safety Modernization Program (SMP), has been beset by delays, cost overruns and failures to reduce pipeline failure rates. 

Despite this, the previous leadership of the ICC declined to reform the program at the conclusion of a two-year investigation in January 2018, claiming its hands were tied by a state law. Peoples Gas filed a rate case in January 2023 ahead of that state law expiring at the end of 2023. At the conclusion of that proceeding in November 2023 the ICC paused the SMP and initiated a new investigation into the program. A rehearing of the rate case in May 2024 reinforced concerns with the design and management of the SMP.

The investigation is expected to conclude by January 2025. As of last year, all five members of the ICC were appointed by Gov. J.B. Pritzker.