Regulators rein in Peoples Gas pipe replacement program

Reforms should save customers money, make Chicago safer

Utility regulators at the Illinois Commerce Commission (ICC) ordered meaningful changes to the Peoples Gas pipe replacement program on Thursday. The decision by the ICC is a victory for advocates who have long called for reforms to the troubled program.

The ICC wrapped up a year-long investigation by ordering the Chicago gas utility to refocus its program on the safety risks associated with its leak-prone iron pipes. These reforms should ensure Peoples Gas’ pipeline safety investments cost less while maximizing public safety benefits. The Commission ordered Peoples Gas to complete the replacement of iron pipes by 2035. 

“Today’s Illinois Commerce Commission decision is a victory for Peoples Gas customers and all Chicagoans,” said Illinois PIRG director Abe Scarr. “By refocusing Peoples Gas on cost-effective investments to mitigate safety risks, the ICC has directed Peoples Gas to run a program that costs less, makes us safer, and facilitates the transition to cleaner energy.”

Today’s decision could significantly reduce future rate hikes by constraining excessive infrastructure spending by Peoples Gas. A recent study estimated that, without reform, the Peoples Gas pipe replacement program would cost an additional $12.8 billion to complete, doubling the amount Peoples Gas customers pay for gas delivery by 2040.

When it first proposed an accelerated pipe replacement program in 2007, Peoples Gas estimated it would cost $1.4 billion dollars. By 2015, cost estimates had ballooned to $7 to $11 billion. In a previous ICC investigation, a Peoples Gas executive acknowledged that the original estimate was only for work to replace leak prone iron pipes, while Peoples Gas had expanded the scope of its program to a broader system overhaul. This broader system conversion requires the replacement of hundreds of additional miles of pipes that do not pose the same safety risks as the iron pipes. 

In its decision, the ICC acknowledged that, while there are potential safety and operational benefits to converting portions of Peoples Gas’ network of pipes to medium pressure, Peoples Gas’ previous approach did not appropriately or cost-effectively prioritize mitigating safety risks.

Since 2017 Illinois PIRG has been the leading voice calling for reforms to the Peoples Gas pipe replacement program. 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 for over four decades. Illinois PIRG built a coalition of over 50 organizations and ran campaigns that won the support of Gov. J.B Pritzker for ending a state law that had shielded the program from ICC oversight, which led to this investigation and decision. 

“Our work is not done. While the ICC has ordered changes, Peoples Gas has to implement them,” added Scarr. “Along with our consumer, environmental and community organization partners, as well as the City of Chicago and office of Illinois Attorney General Kwame Raoul, we will remain vigilant watchdogs to ensure meaningful reforms are fully implemented.”