Findings detail grim future for Peoples Gas customers if regulators don't rein in utility
CUB has released a landmark report that finds Peoples Gas’ proposal to continue to overhaul its network of underground pipes (the System Modernization Program, or SMP) would leave Chicagoans inundated by recurring rounds of record-breaking rate hikes over the next 15 years–unless state regulators step in to rein in the company’s reckless spending.
- Read the report.
- Read CUB’s news release.
- Take action:
- Watch a TV ad about the Peoples Gas boondoggle.
- Sign our petition against reckless gas utility spending in Chicago.
- File a public comment in a state regulatory investigation of the Peoples Gas SMP program.
- Don’t live in Chicago? Past reports have detailed financial harm for consumers outside the city. Sign our petition against reckless gas utility spending across Illinois.
Average fixed monthly costs for Peoples Gas customers have spiraled during the past decade, and as families became ensnared in an intractable struggle to pay for home heating, consumer advocates like CUB continue to urge the Illinois Commerce Commission (ICC) to combat the rampant waste and mismanagement that has plagued Peoples’ pipe-replacement work, known as the System Modernization Program (SMP).
In late 2023, out of concern for skyrocketing costs, the ICC paused the SMP and launched an investigation of the program. With the results of that review pending in early 2025, CUB has released a landmark report showing that, for all of the woes that Peoples’ pipe-replacement work has inflicted on consumers to date, the financial threats from the program over the next 15 years would be exponentially worse unless regulators intervene to hold the Peoples Gas boondoggle in check.
Report Summary:
The report, conducted by industry research firm Groundwork Data and based on sophisticated financial modeling, looked at the scope of pipe-replacement that Peoples Gas proposes to conduct between 2025 and 2040 and finds the following impacts looming for consumers:
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An unsustainable barrage of rate hikes [FOUND ON PAGE 28 OF THE REPORT]. Completion of the SMP would cause rates for the utility’s more than 800,000 customers to escalate at an annual rate of nearly 7 percent, or nearly 50 percent higher than the record-setting pace that those fixed monthly heating costs have surged during the past decade. Those seismic increases would show up on customer bills in the form of delivery charges that would double from the current annual average of $1,206 to $2,424 by 2040.
- A 75-year legacy of costs for consumers [FOUND ON PAGE 28 OF THE REPORT]. While Peoples currently projects that the SMP could conclude by 2040, the report found that its customers would incur residual costs for financing the project until the year 2100, or another 60 years after the physical work is purportedly finished.
- Risks of spiraling costs as Peoples sheds customers [FOUND ON PAGE 41 OF THE REPORT]. As rate increases attributed to the SMP multiply, and cleaner heating sources compete for market share, Peoples is vulnerable to customer attrition. Those defections would leave a shrinking number of Peoples ratepayers to digest the soaring cost of the SMP, an imbalance that could send costs for those who remain captive to the utility’s system skyrocketing. For instance, the researchers estimated that a two percent annual decline in the current volume of Peoples customers would cause delivery charges on average residential bills to soar by 188 percent, to $3,437 a year, by 2050.
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Higher-than-estimated program price tag [PAGE 28 OF THE REPORT]. While cost estimates for the entire scope of the SMP have soared exponentially – from $2 billion at its inception to nearly $11 billion today – the company’s latest tally still understates the final price tag by a wide margin, the report finds. Indeed, the researchers estimated that Peoples will spend another $12.8 billion – on top of the sum it has already funneled into the program – just to complete the work that remains unfinished under the SMP.
- Construction timetable extending a decade beyond current estimates [FOUND ON PAGE 29 OF THE REPORT]. Given Peoples Gas’s replacement rate of 58 miles of main per year (2018-2023), it is improbable that the SMP will be completed by the projected 2040 end date. At its current pace the program would extend to 2051.
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Unsubstantiated claims of a cleaner gas future [FOUND ON PAGE 53 OF THE REPORT]. Despite Peoples’ prediction that full-scale investment in the SMP will allow it to eventually deliver carbon-free gas that helps to alleviate the effects of climate change, the company has yet to supply any credible evidence demonstrating that these fuels are feasible and cost-effective.
The ICC is expected to complete its investigation of the Peoples Gas SMP in January. Consumer advocates are asking state regulators to overhaul the program to reduce wasteful spending.
“Peoples Gas customers are already suffering, but this report gives grim new details on just how devastating the utility’s reckless spending will be on its customers if state regulators don’t rein in the utility,” CUB Executive Director Sarah Moskowitz said. “We urge state regulators to review these findings and take steps to hold Peoples Gas accountable and put wise safeguards on their spending. The state of Illinois must begin to plan for a thoughtful, managed transition to cleaner, more affordable heat, instead of pouring billions more dollars into a methane gas system that is dirty, expensive and hazardous to the climate.”
Media Reaction to the Report:
- Watch a TV ad about the Peoples Gas Boondoggle.
- Chicago Sun-Times (front page): Chicago heating bills could double under troubled Peoples Gas pipeline replacement, report finds
- Chicago Tribune: Peoples Gas pipeline program will cost another $12.8 billion to complete, report says, socking Chicago customers with 7% annual rate increases through 2040 (An earlier Tribune editorial urged the ICC: End the Peoples Gas pipe replacement boondoggle making Chicagoans miserable)
- CBS 2 Chicago: Citizens Utility Board says Peoples Gas pipeline replacement will require 7% annual rate hikes
- WGN Radio (The Lisa Dent Show): CUB: Peoples Gas customers could face yearly price hikes through 2040
- Chicago Sun-Times Editorial: Sky-high cost for Peoples Gas pipe replacement could burn our wallets
- WTTW-TV: Chicago Gas Bills Could Double by 2040 If Peoples Gas Continues Pipe Replacement Project, Report Finds
Recent Articles about Peoples Gas:
Joint News Release: Consumer Groups Launch Major TV Ad Campaign Urging Public to Oppose Record-Breaking Peoples Gas Rate Hikes
With Chicago families already ailing from a decade of spiraling heating bills, an alliance of consumer and public-interest groups Wednesday launched a major advertising blitz aimed at thwarting a threat by…
News Release: Groups deliver more than 5,000 public comments calling for reform of Peoples Gas pipe replacement program
As utility regulators at the Illinois Commerce Commission (ICC) near a final decision on its year-long investigation into the troubled Peoples Gas pipeline-replacement program, consumer and environmental organizations delivered more…
CUB statement: Regulatory judges’ proposed order would give Peoples Gas ‘license to inflict staggering rate hikes’
On Tuesday, administrative law judges for the Illinois Commerce Commission issued a Proposed Order in the regulatory body’s investigation (Docket No. 24-0081) into Peoples Gas’ System Modernization Program (SMP), a…