Consumer groups filed testimony with the Illinois Commerce Commission this week urging regulators to slash two-thirds from a proposed $202 million rate increase by Peoples Gas, pointing to continued “wasteful spending” in the accelerated pipeline replacement program.
Separate filings by Illinois PIRG and Citizens Utility Board are seeking to cut a combined $137 million from the Peoples rate request. In addition to the pipeline program, the groups want to scale back the utility’s proposed profit margin and executive compensation plans.
Meanwhile, the Illinois attorney general’s office took it a step further, recommending a rate cut for Peoples Gas next year.
Peoples Gas filed for the $202 million rate increase in January, primarily to recover projected costs for its ongoing multibillion-dollar pipeline replacement program. Last year, the ICC ordered the utility to complete replacement of the remaining 1,020 miles of aging iron pipes under Chicago by 2035.
If approved, the rate increase request would raise average residential customer delivery charges by $10 to $11 per month beginning in 2027. The ICC is expected to complete its review and issue a ruling by November.
In its filing, PIRG included expert testimony projecting Peoples’ pipeline replacement strategy could raise customer bills by an average of $581 annually by 2035, costing customers $15.2 billion dollars through 2070. The consumer group proposed several cost-saving alternatives such as inserting liners or decommissioning pipes to catalyze a transition to all-electric homes.
“Instead of putting safety first, Peoples Gas is brazenly attempting to stick Chicago with a $15 billion tab for unnecessary, polluting fossil fuel infrastructure,” Illinois PIRG Director Abe Scarr said in a news release. “Our expert testimony documents how cost effective alternatives can deliver safer, cleaner energy for Chicago.”
PIRG asked regulators to cut $42.8 million from the utility’s proposed return on equity, $38.8 million from its pipeline replacement program and $14.4 million in incentive compensation for executives. CUB recommended another $40 million in additional cuts, bringing the total reductions sought by the consumer groups to about $137 million.
The ICC filing Tuesday by the Illinois attorney general’s office included testimony from Mary Selvaggio, a utility regulation consultant, who recommended regulators reduce the Peoples Gas proposal by $209 million, which would actually decrease gas delivery rates for 2027.
In a statement Wednesday, Peoples Gas said it was still reviewing the new filings, but defended the $202 million proposal as following the ICC’s order for accelerated pipeline replacement.
”The work is critical to ensuring ongoing safety and reliability in the system,” Peoples Gas spokesperson David Schwartz said. “A significant reduction in funding level would affect how quickly the work can be done, or whether the work can be done at all.”
Schwartz also said the rate increase “reflects the impact of inflation” on infrastructure work.
Peoples Gas was last awarded a $303 million rate hike in November 2023. This year’s proposal was the first since state regulators paused, reviewed and then ordered Peoples to speed up the long-running pipeline replacement program last year.
Owned by Milwaukee-based WEC Energy Group, Peoples Gas serves more than 898,000 customers in Chicago. During a first quarter earnings call Tuesday, Scott Lauber, WEC’s president and CEO, said annual rate hike requests will likely be the norm as Peoples Gas seeks to complete the pipeline replacement program.
“I expect that it will be more of an annual rate case kind of cadence as you think of Illinois, specifically as it relates to putting in this pipe retirement program,” Lauber said during the call.
In February 2025, the ICC rejected a $7.2 billion proposal by Peoples to modernize its entire system by 2040, ordering the utility to get the pipeline replacement done by 2035 and justify the work in its annual rate hearings to recover the costs.
The utility has a subterranean network of some 4,600 miles of pipes under the city, including significant stretches of original cast and ductile iron — some dating back to the 1800s — which pose a risk of gas leaks that could lead to an explosion.
But the pipeline replacement work, launched in 2011 as the System Modernization Program, has taken years longer and cost billions more than originally projected.
“Chicago gas customers have for years borne the burden of the utility’s wasteful spending, serial rate hikes, and record profits,” CUB Executive Director Sarah Moskowitz said in a news release. “We urge the ICC to once again stand up for struggling Chicago families and reject a rate-hike plan bloated with corporate excess.”
rchannick@chicagotribune.com
