CUB has long called on Springfield to end a special surcharge that allows natural gas utilities to quickly raise customer bills to pay for infrastructure developments. This time, Springfield gave us some good news.
In a 13-page document released last week, Gov. J.B. Pritzker’s office outlined eight principles that will guide discussions on developing clean energy legislation. Among other things, the guidance calls for bolstered energy efficiency programming, a stronger focus on equity and utility accountability, and an end to the automatic monthly infrastructure surcharges.
The document said: “Long-term decarbonization necessitates electrification of the economy, so we must stop automatically increasing spending on gas-related infrastructure. If natural gas companies must make infrastructure expenditures, they should be vetted through the (Illinois Commerce Commission’s) ratemaking process, rather than automatically imposed as monthly surcharges for customers.”
The surcharge referenced in the governor’s guidance is the Qualified Infrastructure Plant, or QIP, charge. The General Assembly in 2013 passed a bill that allowed gas utilities in the state (Peoples Gas, Nicor Gas and Ameren Illinois) to add the QIP to customer bills to pay for infrastructure costs.
The mechanism allows the utilities to rake in revenues faster than under traditional regulation. While utilities line their pockets, the charge has meant nothing but higher gas bills for consumers, especially in Chicago.
Peoples Gas, the city’s natural gas utility, is carrying out a multibillion-dollar program to replace old cast-iron and ductile pipes with plastic piping that is less prone to leaks. While everyone agrees some upgrades are necessary, consumer advocates say the QIP charge allows Peoples Gas to spend at a reckless pace that unnecessarily burdens customers. In June–a time when gas bills should be lower–the average Chicagoan paid more than $52 before the cost of gas and taxes were added to the bill, according to a recent Crain’s Chicago Business article.
CUB points out that the company is legally obligated to replace pipes and has done so for years without the help of a special surcharge. Peoples’ regulatory side-step has helped lead to an unprecedented number of disconnections in the Chicago area. Fifteen percent of Peoples Gas customers received a disconnection notice in 2018, and as of September 2019, the utility disconnected over 9,000 residential heating customers. 93,000 households received at least one disconnection notice.
But the governor’s call to action could mean the end is in sight for this expensive charge that encourages reckless utility spending on their ratepayers’ dime.
If the QIP is eliminated, all major gas utilities in Illinois would get the oversight that they don’t want, but that consumers need.
“Utilities are supposed to provide safe and reliable service without bankrupting their customers,” said Bryan McDaniel, CUB’s director of governmental affairs. “We hope this nudge from Governor Pritzker will help us pass legislation in Springfield that will protect consumers from rapidly escalating gas bills.”