Statement: Record-breaking Peoples Gas rate hike proposal is opportunity for accountability

Utility won’t push for extension of ‘QIP’ surcharge in face of growing opposition

Peoples Gas is filing a $402 million rate hike Friday that, if approved, would increase the average customer’s bill by almost $12 per month. The proposed rate hike is the largest ever by an Illinois gas utility and five times greater than the largest rate hike ever granted to Peoples Gas.

The Chicago gas utility has not proposed a rate hike since 2014. Since then, Peoples Gas has relied on the controversial and ever-escalating “QIP” bill surcharge to repeatedly break annual profit records. 

The failing Peoples Gas pipe replacement program is a significant driver of the proposed rate hike. The program’s budget has ballooned from $2 billion to $11 billion dollars. Peoples Gas has fallen short of its pipe replacement goals every quarter since it began reporting quarterly in 2018. Two outside expert reviews have found that the program is failing to reduce safety risks in proportion to the massive amount the utility is spending. 

The program is also increasingly in conflict with Chicago’s climate goals. Chicago’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. Peoples Gas is proposing to continue the program at essentially the same level, projecting $280 million in spending in 2024.

In presentations to stakeholders, Peoples Gas asserted it will not seek an extension of the “QIP” law that is set to expire at the end of 2023. The law’s extension is opposed by Illinois Gov. JB Pritzker, Illinois Attorney General Kwame Raoul, and Chicago Mayor Lori Lightfoot, along with a coalition of 50 consumer, environmental and community organizations. 

At the end of a two-year investigation in 2018, the Illinois utility regulator, the Illinois Commerce Commission, held that it was unable to place limits on the budget or pace of the pipe replacement program because the QIP law ‘tied its hands.’ With this rate hike proposal, the Commission has the opportunity to finally restore accountability to the failing program.

In response to the record-breaking Peoples Gas rate hike proposal, Illinois PIRG director Abe Scarr made the following statement:

“The time has come to hold Peoples Gas and its failing pipe replacement program accountable. Rather than approving the largest gas utility rate hike in Illinois history, the Illinois Commerce Commission should take this opportunity to limit the rate increase and rein in the out-of-control utility spending driving up gas bills in Chicago.

“The Peoples Gas pipe replacement program is mismanaged, failing to address safety risks, unaffordable for broad swaths of Chicago and absurd in the face of climate change.

“Peoples Gas not working to extend the QIP surcharge is a victory for the 50 organizations that have called for its end and the constituencies and communities they represent. But it will be a pyrrhic victory if the Commission allows Peoples Gas and other utilities to continue spending wastefully and hiking customer bills.”