Why Chicago Heating Bills Could Soar This Winter

Some Chicagoans will have to go without heat this winter.

That’s the ominous warning from one alderman who is raising the alarm on the skyrocketing cost of natural gas prices in the city. But he says he can’t get the mayor or his colleagues to listen.

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Ald. George Cardenas, 12th Ward, is calling on Mayor Rahm Emanuel and his fellow City Council colleagues to take seriously a resolution he filed to have hearings on these high gas prices.

The move is spurred on in part on a new analysis from Crain’s Chicago Business that says city customers pay on average 80 percent more for their gas bill than the average suburban customer. (Peoples Gas supplies city residents while Nicor supplies suburban.) This disparity has gone up only in the last few years; the gap was 30 percent just five years ago, according to Crain’s analysis.

Cardenas says his constituents may have to go without heat in the winter when gas bills are high, and several of them have expressed their concern.

“They want accountability, they want the fact that we have done all we can to make sure the cost is spread out,” Cardenas said.

People Gas is in the midst of a yearslong overhaul of its entire system, in which crews are ripping up old cast iron pipes and replacing them with polyethylene piping. Through the project, estimated to cost $7-$8 billion, the company will eventually replace pipes on every single block in the city. (Some, including Illinois Attorney General Lisa Madigian and former Illinois Commerce Commission member Miguel Del Valle, put the cost of the project closer to $11 billion.) And all of that cost will be borne by ratepayers, thanks to approval from the Illinois General Assembly and the ICC.

A spokesperson for Peoples Gas says that it’s not unusual for urban areas to be more expensive then suburban ones. Nicor, for example, can spread its costs among about 2.2 million customers, while Peoples has only about 800,000. In addition, ripping up city streets and replacing thousands of miles of pipes proves to be costly.

“Engineering and designing your projects around different underground utilities in the city, that comes with a cost,” said Peoples Gas spokesperson Brian Manthey. “If you have any construction, traffic controls, pedestrian controls, it’ll be more costly than it would be in a suburban or rural area. Restoration: we have to repave every street we’ve done in addition to landscaping.”

The main replacement project has been fraught with problems. The company was hit with a big fine because they essentially massively lowballed the cost estimates of this project.

Cardenas wants a hearing in the Health Committee. When he introduced this resolution, it went directly to the Rules Committee. (In City Hall parlance, that is known as the committee where legislation goes to die.)

Cardenas says he hopes for a groundswell of grassroots ire over these prices, and that the General Assembly can pass a bill to restructure these rates.

The AARP is one group lobbying for this, as rate hikes dramatically affect a large percentage of seniors who are on fixed incomes.

“We need a resolution on this so that in fact that when we’re back in Springfield, legislators take a look at this and make sure decisions that they’ve made are the right decisions,” said AARP of Illinois President Bob Gallo. “I’d say that Peoples Gas, Nicor have been making significant profits over many years. Why can’t they invest those profits into their own infrastructure?”

Peoples Gas acknowledges the high costs and they say that ratepayers will see about 2 percent added costs every year as a result of the big modernization program, but that Chicago is still a third lower than gas bills in New York City. They say there is help out there for people who need it.

“It’s really important that we help all customers manage their energy costs, and that starts with energy efficiency,” Manthey said. “We have a fund called ‘Share the Warmth’ fund that also provides dollars to customers that are struggling to pay their bills.”

This project will go on over the next 20 years. This year, Albany Park, Beverly, South Shore and Morgan Park, among others, will see crews working on their streets.

Follow Paris Schutz on Twitter: @paschutz

Related stories:

Massive Peoples Gas Pipeline Upgrade to Result in Higher Prices

Regulators Probe Massive Peoples Gas Pipeline Upgrade

Peoples Gas, CUB Discuss Gas Main Replacement Program

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