We in the Chicago region take pride in our ability to weather harsh winters. As a transplant from Kentucky, I often tell friends and family back home that it’s not too bad once you invest in a heavy coat. But this winter, even bundling up at home won’t save northern Illinois consumers from painfully high home heating bills.
The harshest aspect of this winter, thus far, is the high cost of methane “natural” gas that’s showing up in our spiking utility bills. While current price projections are not as bad as earlier feared, prices are nonetheless significantly higher than what we’ve experienced for the past decade. In November, for example, customers of suburban gas utility Nicor Gas paid 307% more per therm of gas than they did two years ago.
But elevated gas prices are not the only reason our bills are so high: Over the past decade, while the price of gas was historically low, a misguided state law drove up gas utility delivery rates. The law, known as QIP, for qualifying infrastructure plant, was passed in 2013 after gas utilities asked for the same automatic formula rates ComEd won through its bribery scheme in 2011. Like formula rates, QIP weakens regulatory oversight and guarantees higher profits when utilities spend aggressively, even wastefully, on certain infrastructure.
This spending directly and immediately translated into higher utility rates. Nicor delivery rates went up 77% in less than four years. In Chicago, the average Peoples Gas customer is now paying $15 more per month. Because the price of gas has been so low, many customers didn’t notice as delivery rates steadily climbed. But now, customers are being hit with the one-two punch of high gas prices and high delivery rates.
Thankfully, QIP is set to expire at the end of next year. While gas utilities are expected to push the state legislature to extend QIP, a growing chorus is calling for its end, including Gov. J.B. Pritzker, Attorney General Kwame Raoul, Mayor Lori Lightfoot and a coalition of 50 consumer, environmental and community organizations.
Ending QIP is important — but it’s only a first step in combating high home heating costs. The higher delivery rates brought about by QIP are essentially locked in and will go down slowly over time only if utility spending is reined in. That’s not a sure thing: Peoples Gas leadership has made clear it intends to continue plowing money into its failing pipe replacement program, the overall budget for which has ballooned from $2 billion to nearly $11 billion, with or without QIP, potentially driving rates ever higher past 2040.
We also shouldn’t expect methane gas prices to return to pre-pandemic lows. This winter’s prices are well within the historical norm. More of an aberration were the incredibly low prices of the last decade, when fracking unleashed a glut of cheap gas on the American market. As the U.S. increasingly exports gas into the world market, where prices have been 5 times higher than in the domestic market this year, we’re unlikely to return to the era of cheap gas.
More Top Picks Best Fish Tanks
It’s time to consider ditching gas and going all-electric in our homes. Doing so is increasingly viable due to technological advances in super-efficient heat pumps that provide both heating and cooling, and the increased availability of electric induction stoves for cooking. Going electric is good for the climate because methane is a potent global warming pollutant. Eschewing gas is also good for our health. Growing scientific evidence is documenting the respiratory harms of cooking with gas. And increasingly, electrifying homes is good for our pocketbooks. According to a recent analysis by the Natural Resources Defense Council, Chicago households can save $11,000 to $20,000 over 20 years by building or converting to an all-electric home. With a generous basket of incentives in the Inflation Reduction Act and persistently high gas utility bills, many households, including mine, will look to cut the pipe and fully electrify their homes.
We can’t rely, however, on individual action when it comes to an essential service such as home heating — we need to make collective decisions about the future of heat. So, after rejecting utility entreaties to extend QIP, city and state leaders should take further action to chart out a cleaner, healthier, more affordable future.
Municipalities can start by requiring new construction to be all-electric, as a recent Chicago working group report recommended and cities including New York and Los Angeles have already done. At the state level, policymakers should rein in all gas utility spending beyond what’s necessary to maintain system safety while initiating a multistakeholder investigation into the future of heat. That should lead to enacting specific policies to bring the clean energy revolution, already underway in power generation and transportation, into our homes.
We shouldn’t underestimate or downplay the challenges of such a significant transition, and even with prudent city and state action, gas utility customers will have to manage higher bills for the foreseeable future. But hopefully soon, even on the harshest winter days, we can all take off our heavy coats, relax comfortably inside and not have to worry about the health, environmental and financial impacts of burning a fossil fuel in our home.
Abraham Scarr is director of Illinois Public Interest Research Group (PIRG), a member of the Take Our Power Back coalition.
Submit a letter, of no more than 400 words, to the editor here or email [email protected].