By Sarah Moskowitz, Executive Director, Citizens Utility Board
Nicor Gas usually delivers the heat, but at a recent Illinois Commerce Commission (ICC) public forum in Joliet the utility was the one on the hot seat–over escalating bills. One Nicor customer walked to the microphone and directly addressed the utility bigwigs who were on stage to champion their proposal for the largest gas hike in Illinois history. The consumer said she was “heartbroken” over high gas bills that were burdening families.
“We’re still suffering,” she said, calling on Nicor to lower bills so they are “truly affordable for all of us.”
Given Nicor’s track record, it’s doubtful Illinois’ biggest gas utility got the message. Nicor has slapped its over 2 million customers with four rate hikes since 2017–raising delivery rates by 114 percent, or $747 million, and helping its parent, Southern Co., laugh all the way to the bank with $25.2 billion in profits.
Now, Nicor wants a fifth: $316.5 million–a state record that would raise bills by 9.28 percent, or an average of $7.70 per month. If the utility gets its way, this increase would hit just in time for winter.
Over the last decade, excessive, wasteful gas-pipeline spending has been business-as-usual for major Illinois utilities like Peoples Gas, Ameren Illinois and Nicor. Because they earn a profit on their capital investments, gas utilities are incentivized to overspend, and our bills have skyrocketed. Seeing their gravy train ending in decades to come, with consumers and regulators becoming more aware of the hazards of gas, these companies have resorted to serial rate hikes, as Illinois begins the long-term transition from fossil fuels.
Nicor is an excellent example of this business model. Testimony filed by the Citizens Utility Board (CUB) Illinois PIRG, Environmental Defense Fund (EDF) and the Illinois Attorney General’s Office have shown that the utility’s fifth rate-hike request in less than a decade is so full of waste and excess that it’s about double what Nicor can possibly justify under state law.
CUB alone found more than $111 million in overcharges, and when the Attorney General’s recommendations are taken into consideration, the reductions surge to nearly $153 million. And that total still doesn’t account for all of the reductions identified by other parties in the case. Some of the most egregious examples of overcharges include:
Exorbitant profit rate. Nicor wants to exploit struggling customers to further enrich its shareholders. Its rate hike would unfairly raise bills by nearly $50 million to fund a bloated 10.35 percent profit rate – known as “Return on Equity” (ROE)—for private investors.
Lavish Bonuses. Nicor wants another $18 million to reward executives with bonus compensation for reaching financial goals that help enrich shareholders but have absolutely no benefit to customers.
Excessive Monthly Charge. Nicor wants to raise its monthly customer charge by about 20 percent to $23.41. But that just punishes customers who want to use energy efficiency to lower their bills.
Wasteful program. Nicor’s TotalGreen pilot program should be eliminated. It invites customers to pay a premium on monthly bills to lower their carbon footprint via carbon offsets and “renewable natural gas” credits of questionable environmental benefit. After two years, only 131 of Nicor’s 2 million-plus customers have enrolled, with administrative costs of over $2,400 per customer. The program has offset a miniscule fraction of emissions on a system that emitted 24 million metric tons of CO2e in 2023.
These are just a few examples. But this rate case, covering much of the northern third of Illinois, and a $130 million Ameren gas rate case, for central and southern Illinois, raise a larger question for millions of Illinois consumers as the ICC carries on a Future of Gas proceeding to discuss the long-term transition to cleaner and cheaper forms of heat: Why should utilities burn so much of our money on a gas system that is heading toward obsolescence?
No doubt, this transition will take decades, but a strong first step is reining in wasteful gas utility spending. Ahead of the ICC’s final ruling on the Nicor rate hike, due around November, please visit CUBActionCenter.com to sign a petition against the increase or file a comment with the ICC. Even better, attend the next public forum on the Nicor increase:
7-9:30 p.m. Thursday, Aug. 7
Hemmens Cultural Center
45 Symphony Way, Elgin, IL 60120
Please, urge the ICC to end business as usual and turn back Nicor’s ridiculous rate hike.
A version of this op-ed ran in Crain’s Chicago Business.
