{"id":38874,"date":"2023-12-19T11:52:48","date_gmt":"2023-12-19T17:52:48","guid":{"rendered":"https:\/\/www.citizensutilityboard.org\/?p=38874"},"modified":"2024-05-05T17:37:51","modified_gmt":"2024-05-05T22:37:51","slug":"qa-on-icc-gas-rulings-and-how-they-impact-customers","status":"publish","type":"post","link":"https:\/\/www.citizensutilityboard.org\/blog\/2023\/12\/19\/qa-on-icc-gas-rulings-and-how-they-impact-customers\/","title":{"rendered":"Q&A on ICC gas rulings and how they impact customers\u00a0"},"content":{"rendered":"

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The Illinois Commerce Commission (ICC) issued separate rulings in November<\/strong><\/a> that reduced record rate hikes proposed by Illinois’ major gas utilities by $240 million, while also blocking most spending on a controversial pipeline-replacement program that has fueled a heating-affordability crisis for consumers in recent years. The ICC rulings also ordered the creation of a discount rate for lower-income customers and ordered the gas utilities to be part of a process to start planning for Illinois moving away from fossil fuels, such as gas, in the decades to come.\u00a0<\/span><\/p>\n

While CUB doesn\u2019t like to see bills go up a penny at the hands of utilities that are rolling in profits, we\u2019re encouraged that for the first time in a long time the gas companies got much less than what they wanted. <\/span>In an editorial praising the ICC for standing up for gas customers, <\/span>the Chicago Sun-Times wrote<\/a><\/strong>: <\/b>“<\/span>The amount of extra cash Illinois\u2019 natural gas companies wanted to pipe in from customers\u2019 wallets was cranked back significantly…That\u2019s good news for people struggling to pay bills\u2026It also helps Illinois pursue its goal of transitioning to a greater use of renewable energy.”\u00a0<\/span><\/p>\n

This Q&A is designed to give you background on the gas ruling.\u00a0<\/span><\/p>\n

How did the ICC rule on the proposed gas rate hikes?\u00a0<\/strong><\/p>\n

In January 2023, four Illinois utilities proposed a record $812 million in rate hikes: Nicor Gas (2.2 million total customers), Peoples Gas (840,000 customers), Ameren Illinois (816,000 customers) and North Shore Gas (165,000 customers. On Nov. 16, after 11-month rate cases in which CUB and other consumer advocates fought to reduce the rate hikes, the ICC ruled to cut the proposed increases by about $240 million, or 30 percent. Here’s a breakdown:\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
Utility\u00a0<\/strong><\/td>\nWhat utility proposed<\/strong><\/td>\nWhat ICC approved<\/strong><\/td>\nHow much was the rate hike reduced?\u00a0<\/strong><\/td>\n<\/tr>\n
Nicor Gas<\/strong><\/td>\n$320 million\u00a0<\/span><\/td>\n$223 million<\/span><\/td>\n$96.99 million, or 30%, less than what Nicor wanted<\/span><\/td>\n<\/tr>\n
Peoples Gas<\/strong><\/td>\n$403.98 million\u00a0<\/span><\/td>\n$302.9 million\u00a0<\/span><\/td>\n$101.12 million, or 25%, less than what Peoples wanted<\/span><\/td>\n<\/tr>\n
Ameren Illinois<\/strong><\/td>\n$71.57 million<\/span><\/td>\n$35.23 million<\/span><\/td>\n$36.34 million, or 51%, less than what Ameren wanted<\/span><\/td>\n<\/tr>\n
North Shore Gas\u00a0<\/strong><\/td>\n$16.59 million<\/span><\/td>\n$11.02 million\u00a0<\/span><\/td>\n$5.57 million, or 34%, less than what Nicor wanted<\/span><\/td>\n<\/tr>\n
Totals<\/strong><\/td>\n$812.14 million<\/span><\/td>\n$572.15 million<\/span><\/td>\n$240.02 million, or 30% less than what the utilities wanted<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Note:<\/strong> Of the total rate-hike requests above, about $266 million, or about 33 percent, was already being recovered from customers through the Qualified Infrastructure Plant (QIP) charge on gas bills, and the ICC did not have the authority to reduce that amount. Under the QIP law, those funds ($207 million for Peoples Gas and $59 million for Nicor) were simply transferred from the QIP line item to regular delivery charges as part of the rate cases. Consumer advocates can challenge QIP spending in separate reconciliation proceedings in the future, and regulators can issue refunds of any costs they deem excessive and unnecessary. Over the last decade, the QIP line item has allowed gas utilities to more quickly rake in revenue outside a standard, 11-month ICC rate case proceeding. The fee was approved by the General Assembly in 2013 but sunsets, thankfully, at the end of 2023.<\/p>\n

How will these rate hikes impact customers?\u00a0<\/strong><\/p>\n

All of the utilities, except North Shore Gas, have filed their new rates with the ICC. Those rates are reflected in <\/span>CUB\u2019s Making Sense of Your Gas Bill fact sheet.<\/a> <\/strong>(CUB will update this fact sheet when we determine North Shore Gas\u2019 new rates.)<\/span><\/p>\n

The increases, which took effect on Nov. 28 for Ameren and Dec. 1 for Nicor and Peoples Gas, impact delivery rates, which take up about a third to a half of gas bills. It\u2019s what the utilities charge customers to cover the costs of delivering gas to homes\u2014plus a profit.<\/span><\/p>\n

The two main delivery charges are the customer charge, a fixed monthly fee on bills, and a volumetric distribution rate, a per-therm fee. CUB doesn\u2019t like high customer charges because customers have no power to do anything about them. With the per-therm distribution charge, at least, you can use energy efficiency to reduce your bills. (See <\/span>CUB\u2019s Clean Energy page<\/a><\/strong> for efficiency tips.)\u00a0<\/span><\/p>\n

The good news is that the ICC approved lower customer charges than the utilities wanted. In fact, the customer charges actually went down for Nicor and Peoples customers. (It\u2019s going up for Ameren.)\u00a0<\/span><\/p>\n

Summary of Charges, for customers who heat with gas\u00a0<\/strong><\/p>\n\n\n\n\n\n\n\n
Utility\u00a0<\/strong><\/td>\nCustomer Charge (monthly fee)<\/strong><\/td>\nDistribution Charge (cents per therm)<\/strong><\/td>\n<\/tr>\n
Ameren Illinois<\/strong><\/td>\n$20.89 (UP from $19.43)<\/span><\/td>\n43.776 cents (UP from 31.935 cents)<\/span><\/td>\n<\/tr>\n
Nicor Gas<\/strong><\/td>\n$18.88 (DOWN from $23.30)<\/span><\/td>\n21.34 cents (UP from 10.67 cents)<\/span><\/td>\n<\/tr>\n
Peoples Gas\u00a0<\/strong><\/td>\n$27.36 (DOWN from $33.43)<\/span><\/td>\n46.424 cents (UP from 19.477 cents)<\/span><\/td>\n<\/tr>\n
North Shore Gas<\/strong><\/td>\n$21.11 (DOWN from 79.309\u00a2 per day, or $24 per month)<\/span><\/td>\n18.671 cents (UP from 12.896 cents)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Reminder:<\/strong> The rate hikes do NOT affect the supply side of bills, also called the <\/span>Purchased Gas Adjustment (PGA) charge<\/a><\/strong>. The PGA charge, which can change monthly, covers what the utilities pay to purchase gas on the market. The gas utilities are not allowed to profit off the PGA\u2013they\u2019re supposed to pass those costs onto customers, with no markup.\u00a0<\/span><\/p>\n

Did the ICC ruling affect the Peoples Gas pipeline-replacement program?\u00a0<\/strong><\/p>\n

Yes. Another highlight of the ICC rulings was that it paused Peoples Gas\u2019 over-budget and behind-schedule pipeline-replacement program (known as the System Modernization Program, or SMP), pending a state regulatory investigation into the program\u2019s management. The ICC made it clear that the utility still has the responsibility to keep its system safe, respond to emergencies and repair any leaks.\u00a0<\/span><\/p>\n

Launched in 2011, the pipeline project has been behind-schedule and over-budget almost from the beginning, with its projected costs rising from about $2 billion to as much as $11 billion. For years, audits, studies and analyses have found problems\u2014and in one filing with state regulators earlier this year, the company admitted it had not done an overall cost-analysis of the program since 2015.\u00a0<\/span><\/p>\n

The rising costs of the program have helped spark a <\/span>heating-affordability crisis in Chicago<\/a><\/strong>. Customers were paying about $50 a month in total fixed charges\u2014before using any gas\u2014and there have been alarming signs that a large number of residents can\u2019t afford their gas bills: Consistently, about one in five Peoples Gas customers have been more than 30 days behind on their bills. Rising gas bills have hit historically disadvantaged and Black and Brown neighborhoods the hardest. In Englewood, for example, nearly half of Peoples Gas customers have been in debt by an average approaching $1,000.<\/span><\/p>\n

On the other hand, the pipe program has been a boon to Peoples Gas. The utility’s out-of-state parent company, WEC Energy Group, said it was a major profit driver, helping Peoples rake in six consecutive years of record profits. But with the ruling, the ICC instituted a moratorium on the SMP for 2024, pending a regulatory review of how Peoples Gas is administering the program. CUB looks forward to working to reform this program, to eliminate reckless, unnecessary spending and to make sure Peoples Gas conducts pipe-replacement in a reasonable, cost-efficient way that keeps the system safe.\u00a0<\/span><\/p>\n

What were other highlights of the ruling?\u00a0<\/strong><\/p>\n