Chicago Gas Bills Could Double by 2040 If Peoples Gas Continues Pipe Replacement Project, Report Finds

(WTTW News)(WTTW News)

Staying warm during Chicago’s frigid winters will get more expensive if Peoples Gas is permitted to resume its massive pipe replacement program, according to a report released Tuesday by the Citizens Utility Board, a consumer advocacy group.

The utility denounced the findings as riddled with false claims that ignore reliability and risks to Chicago residents, and said the pipe update path favored by the “activists” will add billions to construction costs.

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Peoples Gas, the Citizens Utility Board and its allies — including the Illinois Public Interest Research Group — all agree that the pipes that carry natural gas to homes and businesses are aging, and that they need attention for the sake of public safety.

But critics allege Peoples Gas had been replacing pipes wholesale without using an appropriate risk assessment model and taking its time to do so because the company turns a profit on that infrastructure work.

(Peoples Gas does not make money on delivering gas, a cost that is passed straight through to customers).

Peoples Gas said the need to restart stalled pipe replacement is “urgent” to prevent leaks.

The Citizens Utility Board said its new report finds that the pipe replacement program will come at a considerable cost to consumers, both upfront and through residual costs that carry out long after the project’s projected 2040 completion.

Jim Chilsen, communications director at the Citizens Utility Board, described the analysis as the first to “detail the financial disaster that could be in store for Peoples Gas customers if the utility is allowed to relaunch its plan and continue spending at the pace that it wants. This report is a warning that the Peoples Gas pipe replacement boondoggle will become an even bigger financial disaster for Chicagoans if regulators don’t intervene.”

The report, done by research firm Groundwork Data, found that rates would increase at an annual rate of about 7%, such that the average customer would see their annual cost double from about $1,200 to $2,400 by the year 2040.

Read the full report.

State regulators — members of the Illinois Commerce Commission — are performing their own investigation of the program (Docket No. 24-0081), known as the Peoples’ System Modernization Program, or SMP. Work on the SMP has been on hold since November 2023 while that audit is underway.

Commissioners face a January deadline to make a decision.

The SMP aims to replace 2,000 miles of underground iron pipes that carry natural gas to Chicago homes and businesses with what the utility describes as “durable plastic pipe.”

Peoples Gas spokesman David Schwartz called the report “remarkable and disappointing” and said that the company uses an “industry-standard model” to review how to go about replacing “rapidly corroding pipes.”

Schwartz said that until the ongoing ICC audit forced a pause, the project was on schedule and 38% complete, but because of the hold it may not be done by 2040.

An ICC spokesperson said that as a regulatory agency, the ICC “does not typically speculate or opine on active cases before the Commission” but that the investigation it began in February “will inform how the ICC directs the utility to cost-effectively remove cast iron and ductile iron pipe from its natural gas system. It is the utility’s responsibility to continue to maintain a safe and reliable system while this investigation is ongoing.”

The battle over the pipe replacement project comes amid a larger policy debate over the future of energy.

Environmentalists favor government policies pushing people to use electricity instead of natural gas for heating and appliances to reduce greenhouse gas emissions.

An ordinance to prohibit natural gas appliance installation in new construction has stalled before the Chicago City Council.

As of this month, an ICC order gives low-income residents who sign up the ability to pay a lower rate for utility bills, subsidized by higher-income customers.

Contact Amanda Vinicky: @AmandaVinicky[email protected]


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