Peoples Gas fails its way to record profits

A Tuesday report showed that the Peoples Gas pipe replacement program was behind schedule for the 19th consecutive quarter. A filing today shows it is on track for another year of record profits.

Staff | TPIN

Utilities provide an essential service for the public good. As a state-granted monopoly, a privately owned utility enjoys captive customers and, in exchange, is regulated and its prices set by regulators. Traditionally, this regulation attempts to maximize the public good by aligning the utilities’ opportunity to profit with its achievement. 

But a series of laws passed in Illinois in the last decade have turned this dynamic on its head: maximizing utility profits while failing to ensure the public good. 

There is no better example than the Peoples Gas pipe replacement program, which we have critiqued for years as mismanaged, failing to appropriately address real safety risks, driving an affordability crisis, and absurd in the face of climate change. On Wednesday, we released our analysis of the most recent pipe replacement status report, which showed the program failed to hit its pipe replacement goals for the 19th consecutive quarter. 

Despite this, because of a 2013 law, the failing program is delivering record profits year after year to Peoples Gas and its parent-company WEC. In filings with the Securities and Exchange Commission, WEC regularly credits the pipe replacement program for driving year over year increases in Peoples Gas profits.

WEC released third quarter financials for its subsidiaries today, showing that Peoples Gas had made $171 million in profit through the first 9 months of 2022. As recently as 2019, that would have been a record amount for the year.

 

These record profits wouldn’t be possible without the 2013 law, which allows Peoples Gas to immediately and automatically increase customer bills every month, without traditional regulatory oversight, based on its spending on the pipe replacement program.

One demonstration of this is that all but one of WECs other subsidiaries, North Shore Gas, Wisconsin Gas, Minnesota Energy Resources Corporation, and Michigan Gas Utilities Corporation lost money for the quarter, while Peoples Gas made over $15 million for the quarter.

There’s no reason to accept a clearly failing utility infrastructure program, but it’s even worse that Illinois law is specifically rewarding the failing program with record profits. The 2013 law is set to expire at the end of 2023, and Illinois PIRG and our allies are working to ensure that it does.

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