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Why Chicago (and my brother) may face a heating-affordability crisis

By Jennifer Jones, CUB communications assistant

When CUB Executive Director David Kolata recently described the Peoples Gas pipeline-replacement program as “a looming disaster” for Chicago gas bills it hit close to home, because my brother Milton has been a Chicagoan for the past decade.

Last winter, he and other customers of the city’s regulated utility on average paid about 80 percent MORE to heat their homes than customers of the suburban gas utility, Nicor Gas, according to Crain’s Chicago Business.

My brother, a housing advocate for veterans, doesn’t hesitate to say Peoples Gas charges have gotten “out of control.” He recently paid a $300 gas bill for his single-family, three-bedroom home. Meanwhile, my parents and I, who live in the suburbs about 40 minutes from the city, paid Nicor about $139. “It’s just confusing,” Milton said. “I never understand what I’m even paying for.”

What he’s paying for is a massive, $300-million-a-year pipe-replacement program that CUB, Attorney General Lisa Madigan, AARP Illinois, and Illinois PIRG have been fighting to reform for years. While nobody disagrees that the pipes should be replaced, consumer advocates have asked the General Assembly to put cost controls on the program. That legislation has stalled, but not the Peoples Gas spending binge.

Because of differences in how the companies buy gas, it’s not unusual for Peoples Gas customers to pay more than Nicor customers. But the gap widened significantly last winter, and it appears to be because of the pipeline replacement program. According to Crain’s and an excerpt from a Peoples Gas resolution by 12th Ward Ald. George A. Cardenas, the average Chicago homeowner paid Peoples Gas about $157 a month from November 2017 to March 2018. For Nicor customers, the average monthly bill was $87. 

The Peoples pipeline program is funded through a surcharge on bills, but also through the company’s “delivery” rates–what it charges to deliver gas to homes. And those rates for traditional heating customers have risen over the years, and now soar high above Nicor’s rates.

Peoples Gas Nicor
Monthly Customer Charge $32.40 $16.59
Distribution Charge Per Therm 19.477 cents per therm 4.71 cents per therm

*The chart does not include the Purchased Gas Adjustment (PGA). That’s the price of the actual gas. It fluctuates monthly based on the market price, and makes up a large chunk of your bill. The “Monthly Customer Charge” listed includes small charges that go into state funds to subsidize heating costs for low-income households and for the development of renewable energy and “clean coal technology,” as well as an uncollectibles rider.

And the gap could get even worse. That’s why we call on the General Assembly to act. If something isn’t done to fix this problem, my brother and the rest of Chicago could be facing a heating-affordability crisis in years to come. While he’ll be able to get by, just think of the devastating economic hardship some families will feel if a polar vortex hits like it did four years ago. “Our frustration is, it’s kind of like a slow-motion train wreck,” Kolata told Crain’s.

Read Crain’s full story here and sign CUB’s petition asking public officials to fix the mismanaged Peoples Gas program.