Average Peoples Gas customer paying more than $13 per month for mismanaged pipe replacement program

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Legislature takes no action to address ballooning surcharge, despite legislative proposal from Gov. Pritzker

For Immediate Release

Peoples Gas released a second quarter report Friday on its troubled pipe replacement program. The report shows that the average Peoples Gas customer paid a $13.14 monthly surcharge for the program over the past quarter – more than eleven times the $1.14 per month the legislature was told customers would pay when it passed a law authorizing the surcharge in 2013. In June, the surcharge accounted for 17 percent of the average customer’s bill, almost as much as the cost of the gas itself.

The surcharge, granted to gas utilities two years after ComEd won automatic “formula” rate hikes at the beginning of its bribery scheme, operates like a formula rate for more than half of Peoples Gas’ annual capital spending, providing guaranteed profits and minimal regulatory oversight.

Gov. JB Pritzker proposed ending both the gas surcharge and formula rates for ComEd and downstate utility Ameren in omnibus energy legislation released in April, but those and other consumer-friendly policies were not included in the drafts of negotiated legislative language circulated in late May and early June. The ratemaking provisions in those drafts could even be more profitable for ComEd and expensive for its customers. Legislative leaders recently indicated that the legislation, which has stalled over disputes between labor and environmental coalitions, may be voted on before the end of August.

“It’s time to end automatic gas utility surcharges forcing Chicagoans to pick up the tab for this failing program and shielding Peoples Gas from accountability,” said Illinois PIRG Education Fund Director Abe Scarr. “Illinois needs to marshall all its resources to reach our climate and clean energy goals, not waste billions of dollars on mismanaged fossil fuel infrastructure projects and excess utility profits.”

The program remains behind schedule, retiring only 26 miles of gas mains so far this year, 35 percent less than what Peoples Gas planned to. It was also once again over budget: the overall program has cost $124.6 million so far this year, $4.5 million per mile of pipe retired, which is 34 percent more than planned. This marks the fourteenth consecutive quarter that the program has been behind schedule and over budget, every quarter since the company began reporting quarterly in 2018.

In contrast, over the entire year in 2006, Peoples Gas spent $50 million in 2021 inflation-adjusted dollars to replace 47 miles of main at a relatively scant $1 million per mile retired.

The program is driving a home heating affordability crisis in Chicago. While all major utilities have seen increases in customer debt this year because of the pandemic, the stark differences between Peoples Gas and others highlights the severity and chronic nature of its affordability problems. For example, Peoples Gas customers with debt were collectively $146.5 million behind on their bills as of January 2021. That is $26 million more than ComEd customers, despite ComEd having roughly 2.9 million more residential customers.

Gov. JB Prtizker and Attorney General Kwame Raoul have supported legislation to end the surcharge Peoples Gas is using to recover costs of the pipe replacement program. That followed calls from Chicago Mayor Lori Lightfootfoot and the Chicago City Council for the state to take action. The policy change is supported by a coalition of more than 30 consumer, environmental, and community organizations.

An engineering study released last year echoed previous outside reviews of the program, finding that the program was failing to achieve its purported purpose of protecting public safety by rapidly replacing pipes at risk of failure. The study concluded that the program “has not coincided with a noticeable reduction in pipeline failure rates – particularly in the last decade.”

Illinois PIRG Education Fund has argued for years that the program is failing to reduce system risk in proportion to the billions of dollars Peoples Gas is spending. The reasons? Peoples Gas is prioritizing an overhaul of its system from low to medium pressure over replacing at-risk pipes. Further, Peoples Gas has chronically mismanaged the program. Access Illinois PIRG Education Fund’s detailed report on the program at: https://illinoispirg.org/feature/ilp/tragedy-errors

Chicagoans continue to pick up the tab for failing Peoples Gas program

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Peoples Gas, a gas utility subsidiary in Chicago, continues to mismanage its pipe replacement project, and its customers are still picking up the financial slack.

Its second-quarter report released on Aug. 20 showed that Chicagoans are paying $13.14 per month for this program, a surcharge that’s more than 11 times the amount that the Legislature told customers they would pay back when they approved the surcharge in 2013. This fee accounts for 17 percent of the average customer’s bill and is almost as expensive as the gas itself. This also marks the 14th consecutive quarter that the pipe replacement project is behind schedule and over budget.

“Illinois needs to marshal all its resources to reach our climate and clean energy goals, not waste billions of dollars on mismanaged fossil fuel infrastructure projects and excess utility profits.”

With Peoples Gas Set To Clean Up Toxic Site In Little Village, Alderman Calls For Soil Sampling Residential Areas

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LITTLE VILLAGE — Ald. Michael Rodriguez (22nd) is calling for officials to investigate if residential properties neighboring toxic parcels of land at the Peoples Gas Crawford Station have been contaminated.

Peoples Gas is set to remediate the toxic parcels of land on its property and is continuing a contamination investigation at the Little Village site. But Rodriguez raised concerns about the investigation, saying it should cover nearby residential lots.

During a virtual meeting Tuesday night, Rodriguez asked federal Environmental Protection Agency officials whether they would expand soil sampling beyond the the Crawford Station, 4358 W. 35th Place, to ensure nearby properties are safe.

“Based on current presented findings, contaminants appear slightly over the company property line,” Rodriguez said.

Rodriguez cited concerns raised by other elected officials and asked: What would be done if samples determined contamination had reached nearby properties? What resources would be provided, and who would be responsible for that cleanup?

Ald. Michael Rodriguez raises calls for the expansion of the soil samples beyond the site.

EPA official Bill Murray said the remedial investigation had produced significant data but the investigation had not concluded.

“We plan to consult agency experts in the coming weeks and bring on additional resources to work with Peoples Gas to determine the next steps on this part of the site, including sampling in the residential areas,” Murray said.

The official said the site was “complex” and required “a closer look to determine the health risks” posed to neighbors.

“The EPA is continuing to work on the full characterization with the community’s concerns in mind,” Murray said.

During the meeting, EPA officials outlined plans for the cleanup efforts, which will start next month on two parcels of the former manufactured gas plant.

Peoples Gas will clean up two parcels known as “G” and “V” over the next year. As part of the process, heavy excavation equipment will be used to remove 4-8 feet of contaminated soil, which will be disposed of off-site. Afterward, it plans to treat 16-21 feet of soil before capping the parcel with gravel.

Work will happen 7 a.m.-5 p.m. Monday-Friday and is expected to last a year. The EPA will oversee the cleanup.

Water will be used to prevent dust and other particles from leaving the site, officials said.

If at any time air monitors indicate the level of dust particles exceeds health standards, work will be suspended, officials said. But air monitor data would only be available monthly after its been reviewed and validated, officials said.

The remediation comes more than a year after the botched implosion of the Hilco site, which is across from the Peoples Gas Crawford Station.

During the meeting, Edith Tovar, a member of the Little Village Environmental Justice Organization, urged officials to make real-time air monitor data available to the community.

Since the site is near Little Village Lawndale High School and homes, the EPA and Peoples Gas should have a 24-hour bilingual hotline in case of an emergency, Tovar said.

In 1921, the Koppers Company of Pittsburgh built the site and manufactured gas that was sold to Peoples Gas. The gas company acquired the facility in 1928.

The manufactured gas was used for heating, lighting and cooking in local homes and businesses, officials said.

While in operation, the site produced gas from coal, oil and other raw material. The byproduct of gas production also resulted in waste, including volatile organic compounds, polynuclear aromatic hydrocarbons and metals.

Production temporarily ceased 1958-1962 and shut down permanently in 1965. Peoples Gas sold upwards of 146 acres of the property to First American Realty company the following year, according to the EPA.

The site is bound by the Chicago Sanitary and Ship Canal to the south, the Chicago and Illinois Western Railroad to the north, the Chicago and Western Indiana Belt Line Railroad to the west and Pulaski Road to the east.

Since 2012, Peoples Gas has cleaned up parcels of land at the Crawford Station under the EPA’s supervision.

The property is divided into 28 parcels between 11 owners. The current site is used for logistics and warehouses, officials said.

Peoples Gas will clean up two parcels of land at 4358 W. 35th Place over the next year.

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