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Attorney general protests request for gas-rate hike

People Gas worker Level 11 Hazmfor gas leak W. WisconsStreet N. Marcey Street Lincoln Park neighborhood Monday July 16 2012

People Gas worker at Level 11 Hazmat for gas leak at W. Wisconsin Street and N. Marcey Street in Lincoln Park neighborhood, Monday, July 16, 2012 . | John H. White~Sun-Times.

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Updated: December 24, 2012 6:49AM

Attorney General Lisa Madigan has filed a protest against Peoples Gas and North Shore Gas rate-hike requests that would push Chicago-area consumers’ rates higher next year, arguing that the utilities can justify only 7.7 percent and 2.4 percent of their respective requests.

The Peoples Gas request for $102.7 million should get whacked by 92.3 percent, to $7.9 million, while North Shore Gas’ request for $12.5 million should be stripped to 2.4 percent of its value, for a $300,000 increase, according to the attorney general’s office’s testimony filed late Tuesday with the Illinois Commerce Commission.

The argument is preliminary and could be followed with a request for an even bigger cut.

“This is our first take on the problems with the rate-increase requests,” said Ann Spillane, Madigan’s chief of staff. “We now have an opportunity to read what all of the other parties have submitted in their testimony, which may call for even a further decrease in the rates the utilities are looking for.”

“At a time when ratepayers are already struggling, the utilities have offered no support for their extremely high rate increases,” Spillane said.

If approved, the utilities’ request would raise the average Peoples Gas customer bill $8.40 a month vs. the roughly $6.50 a month increase that the original rate request would have prompted if it were OKd, said Integrys spokeswoman Jennifer Block. Integrys Energy Group is the parent company of Peoples and North Shore.

The request would raise North Shore Gas customers’ bills roughly $5 a month, up from the nearly $4 a month under the original request, she said.

The increases are due to expenses from a 20-year, $2.5 billion Chicago pipe replacement program, new regulations from the city Department of Transportation and a public safety campaign designed to avoid natural gas accidents during sewer work in part by keeping gas pipes from crossing sewer pipes, Block said.

The ICC will rule on the rate-hike requests by July 1, 2013.

The attorney general’s filing says the utilities based their requests on forecasts of costs in 2013 that project extremely high increases in workforce size and labor costs, overstated costs of debt and equity, and unsupported estimates of the costs to comply with Chicago Department of Transportation regulations.

The attorney general’s office recommended eliminating whole categories of the utilities’ expense claims, including the projected $13.9 million cost of complying with new Chicago Department of Transportation rules governing sites where underground structures such as sewer lines and gas lines cross each other and pose risks when work is done on one of the lines. Peoples Gas never submitted documents to support its expense arguments, the AG’s filing argues.

“We are in the very early stages of an 11-month process,” Block said, noting that two more rounds of testimony and rebuttal are yet to come.

The natural gas utilities, which in July filed requests with state regulators to boost rates $88 million, upped that request again in October to a combined $115.2 million — $102.7 million for Peoples and $12.5 million for North Shore.

The rates are slated to take effect in June 2013 if the Illinois Commerce Commission approves them.

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