Statement: Victory: Regulators rein in Peoples Gas pipe replacement program

CHICAGO: Regulators took critical first steps to reform the failing Peoples Gas pipe replacement program Thursday. The action was one of many included in three major gas utility rate decisions voted on by the five-person Illinois Commerce Commission.

The Commission, recently overhauled by Gov. J.B. Pritzker, disallowed the entire proposed 2024 pipeline replacement budget, paused the program, and ordered a new investigation into the program, noting particular interest in reforming the program’s “neighborhood” approach. These decisions stem from recommendations made by Illinois PIRG and co-intervening organizations Environmental Defense Fund, Environmental Law and Policy Center, and NRDC. The Office of the Illinois Attorney General and City of Chicago made similar recommendations.

The pipe replacement program, which has been plagued by severe cost overruns and consistently failed to achieve its public safety objective, has raised customer bills for the past decade and is the primary driver of the record rate hike. On Wednesday, Peoples Gas published its third quarter report on the program, revealing the program to be once again over budget and behind on its pipe retirement goals. 

Over the past decade, the state “QIP” law shielded the obviously troubled program from meaningful oversight or accountability, causing widespread affordability problems in Chicago and delivering six consecutive years of record-breaking profits to Peoples Gas and its out of state parent, WEC Energy Group.

The pipe replacement decision is just one of many made in three rate cases impacting gas utility customers across Illinois. In all cases, the Commission approved lower rate increases than requested by utilities.

The Commission also took important steps to lower profit rates, rein in unnecessary utility spending, lower fixed customer charges, plan for the future of the gas system, and create robust low income discount rates. 

Final written orders are not available yet. Illinois PIRG will provide further analysis once the orders are available.

In response to today’s decisions, Illinois PIRG Director Abe Scarr made the following statement:

“Today’s decision is a major victory for Chicagoans forced to pay ever-escalating bills for the failing Peoples Gas pipe replacement program. At long-last, regulators are holding Peoples Gas and its troubled program accountable. 

“The expiring state “QIP” law limited the Commission’s ability to lower the rate hikes in these proceedings. We applaud the Commission for aggressively pursuing reductions, and encourage them to closely scrutinize the record in outstanding QIP proceedings to order customer refunds and lower rates going forward. 

“There is much more work to do, especially as Illinois considers a transition to powering our homes with clean energy. We look forward to working with the Commission, state and local policy makers, and other consumer, environmental and community organizations to chart a better path forward for Illinois utility customers.”