Two Illinois Commerce Commission administrative law judges issued a proposed order Tuesday to slash an already downwardly revised Peoples Gas rate increase request by more than half.
The order recommends the ICC approve a $66 million rate increase for Peoples, down from the $144 million request the utility made in July.
Consumer groups applauded the proposed reduction, but are seeking an even bigger cut when the ICC issues a final ruling in November.
“This is a step in the right direction, but we urge the ICC to go even further than the proposed order, at a time when it has never been more crucial for regulators to combat unwarranted utility costs,” Eric DeBellis, general counsel for the Citizens Utility Board, said in a news release Wednesday.
Peoples Gas initially filed for a $202 million rate increase in January, looking to recover projected costs for its ongoing multi-billion-dollar pipeline replacement program. The ICC had ordered the utility to complete replacement of 1,020 miles of remaining aging iron pipes under Chicago by 2035.
In July, Peoples voluntarily cut its proposed rate increase request to $144 million. Consumer groups sought a more dramatic reduction, citing “wasteful spending” in the accelerated pipeline replacement program, and, to some extent, the ICC administrative law judges agreed with that assessment in the proposed order Tuesday.
Peoples Gas issued a statement Wednesday that the utility still is assessing the 390-page proposed order recommending reduction of the rate increase to $66 million.
“We are reviewing the administrative law judges’ recommendation,” Peoples Gas said. “As their proposed order states, our work to retire 1,000 miles of old pipe is “a binding safety mandate — not … a discretionary program whose costs can be reduced without serious consequences.”
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.
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In July, Peoples Gas cited downward revisions in the cost of completed pipeline replacement infrastructure, the deferral of construction to later years and other factors in reducing its proposed rate increase to $144 million.
But consumer groups argue that as customers struggle with increasing energy bills, the utility is ignoring cost-saving alternatives such as inserting liners or decommissioning pipes to catalyze a transition to all-electric homes.
“The analysis by the administrative law judges found that the pipe replacement program is not addressing the top safety risks to the Peoples Gas system, that they can consider alternatives to replacement and they haven’t justified the pipe replacement budget,” Illinois PIRG Director Abe Scarr told the Tribune.
If approved, the utility’s $144 million rate increase request would raise average residential customer delivery charges by $7 to $8 per month beginning in 2027. Peoples did not yet have a bill impact projection for the administrative judges’ revised $66 million increase.
The ICC is expected to complete its review and issue a ruling on the rate increase proposal next month. Any 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 898,000 customers in Chicago.