Residents decry ‘audacity’ of proposed $402 million Peoples Gas rate hike

Residents and consumer advocates urged state regulators to reject a proposed $402 million rate hike sought by Peoples Gas.

The meeting Tuesday at UIC’s Dorin Forum, was organized by the Illinois Commerce Commission — the state panel that has until the end of the year to rule on the utility’s rate increase request. 

Speakers told ICC officials that many families are already having trouble affording necessities like groceries because of inflation, and a gas rate increase would only add to pressure on households. 

Summer Pappachen, a Near West Side resident, said she wasn’t planning on attending the forum until she realized it was about Peoples Gas asking for a rate hike. She asked the ICC to reject the request and criticized the company for even asking for more money from customers. 

“Life is not affordable right now, people are moving out of the city in thousands because they can’t afford rent, forget utilities that are stacked on top of that,” Pappachen said. “Don’t come asking poor people for more money.” 

Lily Scales, a resident of the Lower West Side, also admonished the company for seeking the hike given rising costs of living for residents. 

“At a time when we are all being asked to make sacrifices to afford the rising costs of food, healthcare, childcare and energy, I am truly perplexed by the audacity of a company asking us to bear the burden of their proposed rate hike when they continue making record profits,” Scales said. 

Peoples Gas made $208 million in profit in 2022, breaking its earnings record for the sixth year in a row, according to a year-end financial report issued in March. 

The company filed an increase request in January. Company officials said this was its first request for a hike in nine years. They said it was “meant to ensure ongoing safety, reliability and environmental sustainability in Chicago.” 

The nonprofit watchdog Citizens Utility Board has argued the hike would fuel “an excessive profit rate” and should be slashed by at least $63 million.

The request would raise the average residential bill by about $11.83 a month starting in January, although the utility says it expects most customers’ bills would remain “largely flat” because natural gas prices are expected to fall.

According to the company website, Peoples Gas delivers natural gas to more than 884,000 customers in the city.

The hike seeks to offset a state Legislature-approved $15-per-month surcharge that has been in place for a decade but expires at the end of this year. That surcharge has funded a pipe replacement program that could end up costing more than $8 billion by the time it is completed in 2040. That’s nearly six times what the utility estimated in 2007.

Peoples Gas President Torrence Hinton told attendees that the pipe replacement program needs to continue as some pipes in Chicago are more than 150 years old and many are close to their failing point. 

“Our iron pipes, pipes that are beneath many of the Chicago streets in every single neighborhood, carrying the natural gas you need to heat your home, are unfortunately at the very end of their useful life,” Hinton said, pointing to an example of a rusted, cracked pipe on display on stage. 

Tom Aridas, director of regulatory policy and local government affairs at Peoples Gas, said the new rates would go toward replacing those pipes and maintaining reliable service for customers. 

“I assure you we did not take this decision lightly,’ Aridas said. “We are aware of the impact that increased rates may have on our customers. That is why we have worked so hard to avoid a filing for nine years.”

But residents and environmental justice advocates said the company should be using its own profits to replace pipes, and the city should focus on moving away from natural gas to renewable sources. 

That’s the message Caroline Wooten, organizing director of the Illinois Sierra Club, had for ICC officials at the meeting in asking them to reject the company’s request. 

“I’m really troubled by using this rate hike to elongate the life of natural gas infrastructure,” Wooten said. “This is a really good opportunity for us to start to transition to technology that is going to be safer for families and better for the climate.” 

Members of Local 18007 Gas Workers Union spoke in favor of the hike at the meeting, saying it would help secure higher wages for members and better work conditions.

And if the rate hike is approved, the company can expect organized opposition, some residents said. 

“If this goes south, we’re going to go up,” Pappachen said, referring to the opposition. “We’re gonna organize. We know what it means to fight back in the city of Chicago.” 

Contributing: Mitchell Armentrout