By Chicago Alderman Brendan Reilly and David Kolata, CUB Executive Director
If ever there was an absolute certainty, it’s that the controversial Peoples Gas pipeline-replacement program is setting up Chicago residents for an economic disaster, unless we act now.
The company’s decades-long plan to replace gas mains throughout the city has more than tripled in projected costs, been plagued by delays and mismanagement and set the city back in fighting climate change. While that has proven profitable for Peoples Gas, it has become unaffordable and unworkable for consumers.
The average Chicago household is now paying more than $130 annually exclusively to finance Peoples’ pipeline-replacement program, and that is only going higher. The resulting squeeze on family budgets has been proven by the alarming proliferation of disconnection notices for service in the city.
In September 2020, roughly 30 percent of Peoples’ customers received disconnection warnings. Ponder that: Nearly 1 in 3 customers in Chicago can’t afford to pay their monthly gas bill–in the summertime.
It will only get worse.
Even if consumers could afford the pipe-replacement program, it is antithetical to the city of Chicago’s climate change goals. Natural gas is a carbon-producing fuel and will have to be phased out for heating homes by 2050. As such, every lineal foot of new gas main line that Peoples Gas is permitted to install only further widens the carbon footprint chasm the city must bridge in order to meet our environmental objectives.
The city needs to take steps now to alleviate the rising pressures on our economy and climate.
The answer might very well be under our feet.
Geothermal energy—which leverages the earth’s heat—is a proven and cost-effective option for keeping homes and businesses warm. The temperature underground stays consistent year-round, and piping that energy to an electric heat pump makes for a more efficient and comfortable home than a gas furnace. As the technology advances and efficiency improves, the price tag for heat pumps has declined, a trajectory quite the opposite of the costly Peoples Gas system.
Just as local government has granted a polluting, expensive heating company a charter to distribute their heat beneath our streets, the city should create the same opportunity for a new, carbon-free heating utility. It would use that same ground under our streets and alleys to deliver heat more cost-effectively to residents.
A modular, geothermal backbone underneath the city could allow residents to opt into an energy alternative that better meets their needs and positions Chicago as a national leader in supporting communities being bankrupted by their gas utility. Unlike gas distribution, this backbone could be built a block or blocks at a time as demand grows—because it doesn’t need to be connected to a centralized interstate gas pipeline.
A potential additional benefit: Chicago could retain an equity share in the privately operated utility. This equity arrangement would create a new annual revenue stream for the city for use of our subterranean infrastructure. A potential win-win scenario.
The possibility of creating a geothermal utility will require discussion among a diverse group of stakeholders. But the eventual transition to electrified heat is inevitable, whether we act or not.
As the cost of the Peoples pipeline-replacement program continues to skyrocket, demand for an affordable alternative will only grow.
The key questions are: Will we seize on this opportunity to use cutting-edge technology to reduce heating bills and our reliance on fossil fuels? Or will we allow Peoples Gas to continue to charge consumers higher bills to build expensive new infrastructure that is soon to be obsolete?
Chicago utility customers deserve an answer to these questions, sooner than later.
Brendan Reilly is alderman of the 42nd Ward and City Council president pro tem. David Kolata is executive director of the Citizens Utility Board.
For a full version of this opinion piece, please read Crain’s Chicago Business.