{"id":25704,"date":"2020-06-11T11:18:37","date_gmt":"2020-06-11T16:18:37","guid":{"rendered":"https:\/\/www.citizensutilityboard.org\/?page_id=25704"},"modified":"2020-06-11T11:20:04","modified_gmt":"2020-06-11T16:20:04","slug":"peoples-blows-away-record-with-first-quarter-profit-growth","status":"publish","type":"page","link":"https:\/\/www.citizensutilityboard.org\/peoples-blows-away-record-with-first-quarter-profit-growth\/","title":{"rendered":"Peoples blows away record with first-quarter profit growth"},"content":{"rendered":"

Peoples blows away record with first-quarter profit growth<\/strong><\/span><\/h1>\n

By Steve Daniels, Crain’s Chicago Business, June 3, 2020<\/strong><\/p>\n

 <\/p>\n

The first three months of this year may be hard to recall given all that\u2019s happened since, but the first quarter in Chicago was among the warmest such periods in the past two decades.<\/p>\n

It may come as a surprise then that Peoples Gas, which delivers the fuel heating Chicagoans\u2019 homes and businesses, posted profit\u00a0for the period that blew past the record set just the year before.<\/p>\n

The utility posted\u00a0net income of $97.6 million<\/a>\u00a0in the first quarter, a 20 percent increase from $81.3 million in the same period last year. That also was a record for Peoples.<\/p>\n

Temperatures in the first quarter of last year averaged 27 degrees, more than 7 degrees colder than this year\u2019s balmy first three months, according to National Weather Service data.<\/p>\n

It wasn\u2019t long ago when Peoples’ profit over an entire year wouldn’t approach the nearly $100 million it collected in the first quarter. In 2016, its net income was $66.3 million. The year before that it was $87.8 million.<\/p>\n

The most recent first quarter in which temperatures were as warm as this year was 2017. In that first quarter, Peoples posted net income of $77.1 million.<\/p>\n

The dramatically higher earnings are largely the product of a series of laws and rules the state has passed over the past decade to remove virtually all the risk of weather and unpaid bills from utilities coupled with the green light for gas utilities to add a monthly surcharge covering much of the soaring cost of infrastructure upgrades.<\/p>\n

In years in which volumes of gas delivered fall below a set threshold, Peoples and other gas utilities are permitted to charge for delivering the fuel as if the volumes were at the threshold. It works the other way as well; Peoples credits customers for the amounts above the threshold it makes for delivery in colder-than-normal years.<\/p>\n

Consumption of gas in the first three months of 2020 was 14 percent less than the same period a year before, according to Peoples\u2019 filings with the Illinois Commerce Commission.<\/p>\n

Likewise, the cost of unpaid bills is passed along to ratepayers in a monthly surcharge that\u2019s recalculated each year. Currently, that extra charge in Chicago is\u00a0more than $4 a month,<\/a>\u00a0a record since state lawmakers first gave gas utilities that authority in 2009. That charge is expected to keep rising. First-quarter bad debt at Peoples was nearly $26 million, more than double $12.4 million for the first quarter last year.<\/p>\n

It wasn\u2019t many years ago that Peoples used to incur $25 million in unpaid bills over the course of an entire year.<\/p>\n

In an emailed response to questions, the company said, \u201cOur strategy continues to be the disconnection of accounts with higher arrears balances, leaving more customers still receiving our essential service while we work with them on flexible payment solutions with their bills. Any uncollectible dollars we ultimately report to state regulators\u2014the ICC\u2014are subject to an annual . . . review.\u201d<\/p>\n

That has been Peoples\u2019 strategy since 2018, and the\u00a0pile of unpaid bills only has grown<\/a>\u00a0during that time.<\/p>\n

The monthly charge for infrastructure also has continually risen during that period. It\u2019s now over $10 a month for the average Chicago household. Peoples collected nearly $31 million in such charges in the first quarter, up 16 percent from $26.5 million the year before.<\/p>\n

Expect more increases. Capital spending in the first quarter of this year was $141 million, up 57 percent from $90 million in the same period last year.<\/p>\n

In its email, Peoples said a recent ICC-ordered engineering study found that 80 percent of gas pipes in Chicago have an average remaining life of less than 15 years.<\/p>\n

\u201cWhen over 90 percent of state legislators passed the (infrastructure-surcharge) law in 2013, they were thinking about safety and placed a\u00a04 percent cap on the amount we can recover from customers in a year. Additionally, (the surcharge) provides a timely recovery mechanism with regulatory oversight that ensures investments are available to fund the program. We continue to believe the existing (surcharge) is the right approach when it comes to infrastructure investment in our business\u2014our work is capital-intensive and the rider\u2019s built-in cost protections, coupled with its ability to capture real-time recovery, ensures stability.\u201d<\/p>\n

Peoples also defends the collection of laws that have removed virtually all financial risk. \u201cThe laws you referenced are the result of legislative compromises with every consumer stakeholder, including the (attorney general), and the ICC.\u00a0Additionally, each law has a built-in safety mechanism and check and balance\u2014such as annual reconciliation (regulator) reviews and cost caps under the purview of the ICC.\u201d<\/p>\n

The Chicago City Council has passed a resolution asking the state to\u00a0rein in Peoples\u2019 infrastructure program<\/a>\u00a0in the interest of consumers who are increasingly struggling to afford the cost of heat. The ICC earlier this year\u00a0directed all utilities<\/a>\u00a0to provide detailed information on items like unpaid bills, late payments and other signs of affordability struggles.<\/p>\n

In the meantime, the higher profits at Peoples are helping its Milwaukee-based parent, WEC Energy Group, boost quarterly dividend payments to shareholders. The payout increased 7 percent this year following a 6.7 percent increase the year before.<\/p>\n

For a full version of the story, click here.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Peoples blows away record with first-quarter profit growth By Steve Daniels, Crain’s Chicago Business, June 3, 2020   The first three months of this year may be hard to recall given all that\u2019s happened since, but the first quarter in Chicago was among the warmest such periods in the past two decades. It may come as a surprise then that Peoples Gas, which delivers the fuel heating Chicagoans\u2019 homes and businesses, posted profit\u00a0for the period that blew past the record set just the year before. The utility posted\u00a0net income of $97.6 million\u00a0in the first quarter, a 20 percent increase from $81.3 million in the same period last year. That also was a record for Peoples. Temperatures in the first quarter of last year averaged 27 degrees, more than 7 degrees colder than this year\u2019s balmy first three months, according to National Weather Service data. It wasn\u2019t long ago when Peoples’ profit over an entire year wouldn’t approach the nearly $100 million it collected in the first quarter. In 2016, its net income was $66.3 million. The year before that it was $87.8 million. The most recent first quarter in which temperatures were as warm as this year was 2017. In that first quarter, Peoples posted net income of $77.1 million. The dramatically higher earnings are largely the product of a series of laws and rules the state has passed over the past decade to remove virtually all the risk of weather and unpaid bills from utilities coupled with the green light for gas utilities to add a monthly surcharge covering much of the soaring cost of infrastructure upgrades. In years in which volumes of gas delivered fall below a set threshold, Peoples and other gas utilities are permitted to charge for delivering the fuel as if the volumes were at the threshold. It works the other way as well; Peoples credits customers for the amounts above the threshold it makes for delivery in colder-than-normal years. Consumption of gas in the first three months of 2020 was 14 percent less than the same period a year before, according to Peoples\u2019 filings with the Illinois Commerce Commission. Likewise, the cost of unpaid bills is passed along to ratepayers in a monthly surcharge that\u2019s recalculated each year. Currently, that extra charge in Chicago is\u00a0more than $4 a month,\u00a0a record since state lawmakers first gave gas utilities that authority in 2009. That charge is expected to keep rising. First-quarter bad debt at Peoples was nearly $26 million, more than double $12.4 million for the first quarter last year. It wasn\u2019t many years ago that Peoples used to incur $25 million in unpaid bills over the course of an entire year. In an emailed response to questions, the company said, \u201cOur strategy continues to be the disconnection of accounts with higher arrears balances, leaving more customers still receiving our essential service while we work with them on flexible payment solutions with their bills. Any uncollectible dollars we ultimately report to state regulators\u2014the ICC\u2014are subject to an annual . . . review.\u201d That has been Peoples\u2019 strategy since 2018, and the\u00a0pile of unpaid bills only has […]<\/p>\n","protected":false},"author":21,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"class_list":["post-25704","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/pages\/25704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/comments?post=25704"}],"version-history":[{"count":0,"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/pages\/25704\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.citizensutilityboard.org\/wp-json\/wp\/v2\/media?parent=25704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}