Proposed Rate Increases Denied
Utility customers in Illinois will see a rise in their natural gas bills in 2024, but action by the ICC on November 16, 2023, ensured those rates will not be as high as providers had asked for. The decisions come at a time when Illinois residents are struggling to pay high utility bills and state leaders are focused on transitioning away from the natural gas system to meet climate change goals.
In January 2023, four Illinois gas utilities requested significant rate increases. Peoples Gas, which serves over 800,000 residential customers in Chicago, had asked for a record $402 million increase. The ICC ruled to cut that boost to $300 million, a 25 percent reduction. The move means utility customers will see an increase in gas bills of about $6 per month next year, down from a nearly $12 increase had Peoples Gas’ requested figure been granted. The ICC also ordered a pause of Peoples Gas’ multibillion dollar pipeline replacement program to further investigate safety risks. The cost of the replacement program has skyrocketed to nearly six times the original estimate.
The ICC ruled on a proposed rate increase by Nicor Gas, which serves customers in 31 northern Illinois counties. Their $320 million proposed rate hike was knocked down from $320 million to $223 million, and North Shore Gas’ $16.6 million request was slashed by $5.6 million. Ameren’s proposed $71 million-plus request was trimmed in half to $36.34 million. The ICC’s decisions include a plan for utilities to take into account the impacts of Illinois’ decarbonization and electrification goals on the natural gas system.
The ICC lowered the expected rate hikes by deciding companies’ profits through their return on equity. The rate increase decisions also began a process for the state deciding what role natural gas should play in Illinois’ clean energy transition. Each gas company involved is set to participate in a series of “future of gas” hearings next year.
Future of Natural Gas in Illinois and Upcoming Hearings
Illinois is one of five states where more households use gas stoves than electric stoves. The American Chemical Society has found that gas stoves emit nitrogen dioxide, carbon monoxide, and other chemicals linked to asthma, cancer, and cardiovascular disease. Despite previous rhetoric to the contrary, Consumer Product Safety Commission leaders have clarified that the government is not set to ban gas stoves outright.
Nonetheless, concerns about the potential dangers of natural gas stoves remain. Experts continue to debate the long-term effects of exposure to certain chemicals, and those concerns are not going away as the push for climate change and clean energy goals continues.
A Democrat Illinois representative introduced legislation in the spring of 2023 that would mandate warning labels be placed on new gas stoves to alert consumers of asthma risks. About 35 percent of households in the U.S. use a gas stove, and in Illinois, gas stoves are popular in part because they are reliable and transmission lines can be buried to combat issues with brutal winter weather. Gas stoves can also be cheaper than electric stoves in terms of energy costs, and certain cooking tasks are faster and easier to accomplish.
The ICC has ruled that all three gas utilities companies must participate in a ‘Future of Gas’ proceeding. This will include the formal exploration and consideration of the role of gas in the future, including in the context of the state’s environmental and energy policy goals. The process will force gas utilities to plan for a different gas spending landscape, including the impacts of electrification. These hearings are expected to being sometime during the current calendar year.
Current leaders in the state of Illinois have not hidden their desire to move to a full clean energy economy. “As the state embarks on a journey toward a 100 percent clean energy economy, the gas system’s operations will not continue to exist in its current form,” ICC Chairman Doug Scott stated. “Identifying how our gas and electric systems can adapt to meet these goals, and what specific actions should be taken to achieve them, will be an important task for the Commission going forward.”
ICC Board Leadership Clashes With Trade Unions
Doug P. Scott, a previous ICC Chairman from 2011-2015, was appointed as ICC Chairman by Governor Pritzker on June 17, 2023, to serve out the remainder of former Chair Carrie Zalewski’s term. However, Scott and two other Pritzker appointees to the ICC have yet to be confirmed by the Illinois Senate. All the appointees have recently voted against the stated interests of trade unions, while Senate Democrats raise millions of campaign dollars from trade union support.
Operating Engineers Union Local 150 expressed outrage over the ICC vote in November 2023 to pause $265 million in natural gas pipeline replacement work this year by Peoples Gas. “This is a troubling example of political overreach,” Local 150 posted on X (formerly Twitter). “Unconfirmed political appointees at the Illinois Commerce Commission are playing games with people’s jobs, heat, and safety as we head toward the holidays and the cold of winter. The war on gas stoves is here.”
Peoples Gas responded to the ‘pause’ vote by asking for half of the project money to be restored to pay for ongoing projects and critical safety and reliability work. When that request was denied, Local 150’s top lobbyist, Mark Poulos, said that decision will cost his union members 1.5 million hours of work this year. These decisions amidst candid and pointed rhetoric from the trade unions could result in difficult ICC confirmation hearings upcoming in the Senate for the Pritzker appointees.