New report pegs additional cost of continuing Peoples Gas pipe replacement program at $12.8 billion

Earlier this week, our friends at the Citizens Utility Board, or CUB, released a new report, written by Groundwork Data, analyzing the implications of continuing the Peoples Gas pipe replacement program without reform. 

There’s a lot of great analysis in the report. Not surprisingly, the potential costs to Peoples Gas customers caught the attention of the news media, including the Chicago Tribune, and the Chicago Sun Times, which made the report its cover story on Tuesday. 

If Peoples Gas is allowed to continue running the program without reform, the report found:

• Peoples Gas will spend another $12.8 billion, on top of the billions it has already spent.
• By 2040, delivery charges on customer bills would double from the current annual average of $1,206 to $2,424.

While these findings are too late to be formally included in the ongoing investigation into the Peoples Gas pipe replacement program, they provide important context to the proceeding. 

In the investigation, Peoples Gas has argued that their preferred approach would cost an additional $7.2 billion. But its hard to put much faith in that figure. 

First, Peoples Gas has never demonstrated an ability to accurately forecast program costs. Total program cost estimates started at $1 billion, then grew to $2.4 billion, to $8 billion, and in the last formal cost estimate, up to $11 billion. 

Second, when pressed in the investigation, Peoples Gas admitted its number was born of “simple calculations” and “not meant to provide the Commission with a new cost estimate for the [pipe replacement program].”

Unfortunately, Peoples Gas’ ongoing inability to provide a credible cost estimate for its program is one reason why we at PIRG, the Office of the Attorney General, and City of Chicago are all calling on the Illinois Commerce Commission to not only implement immediate reforms to the pipe replacement program, but also open a “Phase II” investigation to collect better data from Peoples Gas and contemplate longer term reforms to the program. 

You can learn more about the investigation here.