A little over a year ago, we wrote about how Peoples Gas’ overbudget, unaffordable pipe-replacement project needed to be rethought completely. Thankfully, the Illinois Commerce Commission, which regulates utilities, agreed and called a halt to the Chicago natural gas utility’s massive infrastructure plans.
Since then, Peoples, the ICC staff and other parties have filed pages upon pages of testimony in response to the commission’s call for a cheaper way to replace the underground pipes that need replacing rather than a total rebuild of Chicago’s entire gas system, which Peoples had been pursuing.
For anyone who has followed the issue, and you’re forgiven if you haven’t, it will come as no surprise that Peoples continues to believe it necessary to upgrade the entire pipe system in Chicago, to the tune of $7 billion more (if Peoples’ current estimates are to be believed).
Unfortunately, the ICC staff and two administrative law judges tasked with sifting through all the evidence presented to date have sided with the utility and against consumer advocates like Illinois Attorney General Kwame Raoul, the Citizens Utility Board and Illinois PIRG. They agree with Peoples that the commission ought to let the utility resume rebuilding the entire system, going neighborhood by neighborhood, as it’s done for over five years. The judges’ proposed order, to be taken up by the commission in January, was issued early last week.
So, just like last year, the five-member commission itself, led by Chairman Doug Scott, will have to reject the advice of its staff and judges and keep the brakes on Peoples’ profligate spending if low- and lower-middle-income Chicago households are to be able to afford to keep warm in winter over the foreseeable future. The commissioners should do just that.
We haven’t spoke to Scott and his fellow commissioners — indeed, they’re not allowed to talk to people like us about open dockets — but it would surprise us greatly if they thought they were taking the bold step of halting Peoples’ work in late 2023 only to resume it a year later with minimal changes.
Peoples’ project was a train wreck and not just because its contractors did damage to residents’ yards and have been unresponsive to claims and repeated requests to fix problems, at least in our experience.
Peoples has been missing progress goals on a yearly basis even as spending remained inflated and budget estimates ballooned, and ever-increasing number of Chicago households were finding themselves buried in gas bills they couldn’t pay as a result. Heating bills in Chicago for the average household were topping $1,000 a year. While the (likely temporary) low cost of natural gas itself is helping to ease the situation for now, 16% of residential customers at last count were more than 30 days’ late on their Peoples Gas bills. In 10 of the lowest-income Chicago ZIP codes, delinquent households are more like 30%.
And there were — and are — over 1,000 miles of pipe under Chicago’s streets made of leak-prone cast or ductile iron that still need updating, 13 years after Peoples launched its “accelerated” pipe replacement program.
Returning to business as usual will keep happy the Milwaukee-based corporate overlords at WEC Energy Group, the parent of Peoples, and the politically potent trade unions like Local 150 of the International Union of Operating Engineers whose members benefit from digging up Chicago’s streets and inconveniencing residents. But it would amount to the classic definition of insanity: doing the same thing and expecting different results.
It also would exacerbate a creeping cost-of-living crisis afflicting Chicago households at the lower end of the income spectrum. We’ve already seen a public uprising at Mayor Brandon Johnson’s proposal to hike property taxes by $300 million in order to preserve union jobs. The public recoil was reflected in the City Council’s 50-0 rejection of the mayor’s budget. If heating bills resume rising at levels seen before the ICC halted the program, all public officials deemed responsible likely will incur similar wrath.
Many upper-income households in Chicago don’t have to worry about Peoples Gas’ misadventures. Most of the landmark high-rises along the lake, which are home to many well-to-do Chicagoans, long have been heated with electricity. Likewise, most downtown office buildings are kept warm that way.
As Peoples’ heating bills continue to rise, we are likely to see other high-income households in places like Lincoln Park and the Gold Coast switch to electricity-powered heat pumps. The economics of the conversion, for those who can afford the up-front costs, already justify the move in many cases.
In that scenario, an ever-shrinking pool of middle- and lower-income households, as well as apartment dwellers when landlords pass along the heating costs in rents, will be left holding the bag to pay for Peoples’ gold-plated system overhaul. These residents already are being squeezed by rising property taxes, insurance rates and electricity rates, among other necessities of modern living. There is no more basic a need than staying warm.
In addition, there continues to be uncertainty about the long-term future of natural gas as both a heating and cooking fuel. Yes, Mayor Johnson’s effort to ban natural gas in new Chicago buildings has died (for now) for lack of support in the City Council. But over the longer haul the warming climate will continue to raise questions about the use of methane — a greenhouse gas — for home heating. A complete rebuild of natural gas infrastructure, designed to last 50 years or longer, presents a better-than-even risk of saddling residents and businesses with paying for an obsolete system.
Indeed, the commission, at the urging of Gov. JB Pritzker, who appointed all five of the present commissioners, earlier this year began an expansive effort to assess the “future of gas” in Illinois. With that important policy assessment far from completed, it would be odd to green-light resuming Chicago’s complete system conversion to medium-pressure piping from the current low-pressure pipes.
Old, leaky pipes must be retired or repaired. On that point no one disagrees. But that important work must be performed more surgically and with far more attention to the equipment in the worst shape. If the commission insists, as we believe it should, on this more cost-effective approach, Peoples Gas must become part of the solution and cooperate with efforts to upgrade the gas system without burning a hole in economically stressed Chicagoans’ pockets.
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