Peoples Gas is seeking to slash its own $202 million rate increase request by $58 million in a filing Tuesday with the Illinois Commerce Commission.
Citing downward revisions in the cost of completed pipeline replacement infrastructure, the deferral of construction to later years and other factors, the revised $144 million rate increase represents a nearly 30% reduction from the proposal Peoples Gas submitted in January.
If approved by the ICC, the revised proposal would still raise average residential customer delivery charges by $7 to $8 per month beginning in 2027, down from a projected $10 to $11 per month increase in the original proposal.
“Peoples Gas works every day to keep bills as low as possible for customers, while delivering the reliable energy Chicagoans need,” Maria Bocanegra, president of Peoples Gas, said in a news release. “This updated filing reflects that commitment.”
Consumer groups Illinois PIRG and Citizens Utility Board filed testimony in May with the ICC urging regulators to slash $137 million or two-thirds from the proposed $202 million Peoples Gas rate increase, pointing to “wasteful spending” in the accelerated pipeline replacement program.
Not surprisingly, CUB issued a statement Tuesday evening contending the utility hasn’t gone far enough in trimming its proposed rate increase.
“Our attorneys are still waiting to see the formal filing that Peoples Gas says is coming, but it’s ridiculous for the utility to seek a pat on the back for this reduction when it is still attempting to extract tens of millions more dollars from its customers at a time when the cost of living is soaring,” CUB Executive Director Sarah Moskowitz said.
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Peoples Gas filed the proposed $202 million rate increase 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.
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.
“By reducing its initial request by $58 million…Peoples Gas has conceded that it cannot justify its full rate hike request,” Illinois PIRG Director Abe Scarr said during a news conference Wednesday. “We welcome this development and call for greater reductions to the rate hike.”
In addition to the lower cost of recently completed work and pushing back the timeline of certain infrastructure construction, Peoples employee compensation tied to financial metrics has been removed from the rate request, the utility said.
While the deferral of pipeline replacement work would lower costs for customers next year, Scarr questioned whether Peoples Gas is on pace to meet the timeline issued by the ICC for completion of the entire project.
“When it first filed in January, Peoples Gas said it would retire 35 miles of iron pipe in 2026,” Scarr said. “It then dropped the number to 21 miles, and now it’s saying it will only retire 14 miles. Yet Peoples Gas asserts it will soon be retiring more than 130 miles of pipe every year. Frankly, I question its ability to.”
Peoples Gas also cited a reduction in rates as part of a settlement made earlier this year with the ICC and stakeholders regarding costs dating back to 2017. Customers will also receive bill credits over the next three years as part of the settlement, the utility said.
The ICC is expected to complete its review and issue a ruling on the adjusted rate increase proposal by December. If approved, the rate increase would take effect in late 2026 or early 2027, the utility said.
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 894,000 customers in Chicago.