Fighting Peoples/North Shore Gas rate hike
Jan. 25, 2010 —Peoples Gas and North Shore Gas, which provide natural gas service for Chicago and some northern suburbs, were granted an $84 million delivery rate hike on Jan. 21. CUB formally appealed the Illinois Commerce Commission (ICC) decision on Feb. 22.

Background
The companies filed a proposed $180 million increase in February, 2009. The total amount was adjusted during the course of the case and eventually became $131.3 million. The companies received about $83.6 million ($69.8 million for Peoples Gas, and $13.8 million for North Shore Gas). That translates into $50 to $70 more a year for the average customer.

The increases affect the rates the companies charge to cover the expense of delivering gas to homes—plus a profit. These delivery costs take up about a third of a customer’s gas bill. The rest covers the cost of the actual natural gas, which the companies are supposed to pass on to customers with no mark up.

What CUB Says
A coalition of consumer advocates, including the Illinois Attorney General's office and the Citizens Utility Board (CUB), argued that the companies could justify no more than a $57.2 million rate hike ($46.2 million for Peoples and $11 million for North Shore Gas). Although CUB helped to reduce the rate hike from it's original level of $180 million, the consumer group on Jan. 21 released a statement saying it planned to appeal the ICC ruling. "While the companies got less than what they asked for, they still got more than what they need or deserve," said CUB, which filed the appeal on Feb. 22.

On top of the rate hike, the ICC approved a special charge on bills (a rider) that beginning in 2011 would allow Peoples to pass on to customers the financing costs of upgrading its cast-iron main system. The charge, known as an Infrastructure Cost Recovery (ICR) rider, will allow the company to recover the costs automatically through a separate line item on bills, rather than having the costs reviewed as part of a traditional, thorough, 11-month rate-hike case.

Take Action
Help CUB in our fight to appeal the rate hike. Call state regulators, 1-800-524-0795, or file an online comment with them. (At the boxes on top of the "comment" page, choose "P," case numbers 09-0166 for North Shore or 09-0167 for Peoples. Then hit "select"). Tell state regulators NO to the rate hike. Also, please give to CUB's consumer-defense fund to help us fund this appeal.

Talking Points
-Peoples Gas and North Shore Gas don't deserve or need such a massive rate hike, especially at a time when so many of their customers are struggling to make ends meet with a limping economy.

-When will the companies stop asking for higher rates? Only about a year after they received a rate hike totaling about $71 million, both companies were back at the table asking for this increase. The companies should learn how to tighten their belts, just like the families who have to pay their high bills.

-Both companies show horrible timing in askking for this rate hike now. While state and federal lawmakers have wrestled with ways to stimulate the economy and put more money back into our pockets, Peoples and North Shore just want to take more out. There is no better way to make a sick economy even more ill than to add to consumers’ fixed monthly costs. The more money they pour into their gas bills, the less they have to use for discretionary spending that could spark the economy.

-We ask the commission to reconsider the sppecial charge (or rider) that would do an end-run around the regulatory process and allow the company to pass on to customers the costs of pipe-replacement work without going through a traditional 11-month rate case. Riders circumvent the regulatory process, pass all the burden of financing upgrades onto the consumers' shoulders, and don't give the company any incentive to be more efficient. The company could free up money to pay the costs of such upgrades by becoming more efficient.

-The rider is is unnecessary and illegal unnder Illinois law. Such a scheme is illegal because Illinois law bans “single-issue ratemaking” and requires the ICC to review all costs before they can be passed on to consumers.

-Peoples Gas argued the new charge would maake it easier to accelerate the replacement of gas mains. However, the company has not committed to any concrete plans for future investments and the pace of the company’s replacement program has slowed dramatically in recent years—belying the notion that the new charge was needed to spur emergency measures. In fact, in 1991, the company replaced about 100 miles of gas pipe, without any special charge on bills. This year, the company only plans to replace about 10 miles.