CHICAGO (CAPITOL NEWS ILLINOIS) — Dozens of elected officials penned a letter Tuesday urging state regulators to reject Peoples Gas’ $144 million rate hike request and reform the company’s pipeline retirement program.

Several officials joined utility watchdogs at a news conference at Chicago City Hall announcing the letter.

“If a company is delivering a service to us, we should pay for it,” Ald. Maria Hadden said. “But when is enough enough? … This will be the eighth year in a row that they’re making record profits.”

The lawmakers and consumer advocates decried the 10.1% shareholder profit Peoples Gas sought in its latest rate request as “outrageous” and “greedy,” particularly at a time when residents are already struggling to keep up with rising costs.

State data shows nearly one in five residential Peoples Gas customers were more than 30 days behind on their bills to the utility as of August, the latest data available. Those roughly 162,000 customers owed over $92 million, or about $570 on average, to the company.

“This is how bad it is in the summer, … before we even hit the extreme pain of winter gas bills,” Citizens Utility Board spokesperson Jim Chilsen said. “Chicagoans face a heating affordability crisis sparked by Peoples Gas.”

Read more: ‘A hardship’: Peoples Gas customers rally against requested rate hike | Cut with ‘an axe’: Watchdogs, AG call for massive cuts to Peoples Gas rate request

If approved in full, the $144 million request would increase average monthly bills for residential customers by $7-8 beginning in January. Consumer advocates say that would result in a 71% increase in the company’s gas rates over the last four years. The utility received the largest rate hike in state history only three years ago, when regulators approved a $303 million increase in spending. 

The company shaved nearly 30% off its original $202 million request earlier this year, but utility watchdogs say it did not go far enough.

Read the letter: Elected Official Letter – Peoples Gas Rate Hike.pdf

Five state senators, 15 state representatives and 18 Chicago City Council members signed the letter.

Peoples Gas spokesperson David Schwartz told Capitol News Illinois that the company understands the concerns about affordability but defended the requested profit rate.

“The requested return on equity is lower than similar requests recently made by other natural gas companies in Illinois, as Peoples Gas tries to balance market conditions and affordability,” Schwartz said. “Postponing essential infrastructure work, though, is not a solution. That would greatly increase safety risks and costs.”

Sen. Graciela Guzmán, D-Chicago, said safety could not be a blank check for a program that has “repeatedly failed to deliver the results that Chicagoans were promised.”

“Spend smarter,” Guzmán told Peoples Gas. “Prioritize the pipes that actually pose the greatest risk. Consider less-expensive alternatives where they can do the job safely. And stop asking working families to finance decades of unnecessary fossil fuel infrastructure.”

Rescinding the mandate?

Peoples Gas said the requested spending was necessary to meet a directive from the Illinois Commerce Commission, which oversees the utility, to retire over 1,000 miles of old iron pipes that carry natural gas under Chicago’s streets by 2035.

Now, advocates want to see the ICC rescind its own mandate on pipe retirement. 

Traditional pipe retirement often means digging up streets and sidewalks to replace old cast-iron pipes with new plastic ones. Consumer advocates argue pipes can be repaired more cheaply using alternative technologies like sealants that coat them from the inside, though Peoples Gas has said it needs regulatory clarity from the ICC on whether relining would be in compliance as a method to retire pipes.

Early last year, the commission ordered the pause of a previous version of the pipe modernization work, effectively throwing out the approach and sending Peoples Gas back to the drawing board following a yearlong investigation.

The system modernization plan, as it was then called, was widely criticized for mismanagement and failure to prioritize the most at-risk pipes, leading to delays and budget shortfalls.

Peoples Gas initially estimated it would retire 35 miles of old pipes this year and 53 next year, but by July, the target for this year had dropped to 14 miles. That means the company would need to retire over 135 miles of pipes per year to meet the 2035 target, up from a fraction of that in recent years. 

Consumer advocates say they agree the system needs to be maintained, but say the company needs to do a better job of balancing affordability and safety. They urged residents to submit comments to the ICC and to reach out to their representatives.

“Peoples Gas has not been a good actor,” Hadden said. “They do not deserve one more cent from Chicagoans.”

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.