Article Summary
- Nicor Gas and Ameren Illinois customers will likely see a rate increase on their bills next year, pending a final decision from state regulators in the coming weeks.
- An administrative judge recommended that regulators increase rates. Ameren customers would see a roughly $5.80 increase in bills per month under the proposal. Nicor said bills would go up around 5% to 6%.
- The companies say that the increases are necessary to pay for safety upgrades and system maintenance, but advocates accuse them of unnecessary profiteering.
- The cases are set against a backdrop of uncertainty as utilities and regulators weigh the future of the natural gas industry.
This summary was written by the reporters and editors who worked on this story.
Customers across Illinois could face increased natural gas rates next year, based on proposed decisions in two proceedings before the Illinois Commerce Commission.
The regulatory agency, which oversees gas utilities, is considering two requests from Nicor Gas and Ameren Illinois. A five-member panel of commissioners, appointed by Gov. JB Pritzker, will make the final decision in the cases in November.
But administrative judges overseeing the cases have released proposed decisions which suggest cutting Nicor and Ameren’s requests by about one third.
Nicor, which delivers natural gas to 2.3 million customers in northern and western Illinois, asked for a $314 million rate increase in January — equivalent to about $91.50 per year or a 9.21% increase for residential customers, according to the company.
Ameren, which has 800,000 customers throughout downstate Illinois, asked for a $129 million increase in January, or about $100 per year, or about a 13% increase for residential customers, according to the Citizens Utility Board, a consumer watchdog group.
The proposed decisions cut Nicor’s request by $109.8 million and Ameren’s by about $43.7 million, according to CUB. Ameren officials said the cuts bring the increase down to $5.80 per month, or about $70 per year for the typical customer. Nicor officials said the increase under the order would be about 5% to 6%.
“Even with the proposed increase, our distribution rates remain among the lowest of any major natural gas utility in Illinois and the total bill for an average residential customer under proposed rates continues to remain in line with the Consumer Price Index,” Nicor spokesperson Jennifer Golz said in a statement.
Brad Kloeppel, Ameren’s senior director of gas operations, defended his company’s request for higher rates by saying the majority of the increased revenue will go toward safety upgrades and compliance with federally required safety testing.
“Fifty percent of the pipes on our system are over 50 years old,” Kloeppel said. “We have to design, operate, maintain our system to provide gas service on the coldest hour of the coldest day.”
Ameren’s rate case also includes pilot programs that could swap gas service in some areas for electric service, and for an incentive program for “renewable natural gas” — a method of capturing methane from landfills and other sources that would otherwise be released as a pollutant.
Despite proponents’ claims that it can help reduce greenhouse gas emissions, some environmentalists criticize that technology for still releasing some pollutants.
Advocates want more cuts
The gas cases have attracted significant attention from consumer advocacy groups, who say the requests go too far and represent a trend of increasingly frequent rate hikes.
“This is part of a troubling trend being repeated, where large rate hikes are becoming the norm, and consumers simply cannot keep paying the price,” Jeff Scott, AARP’s senior associate state director, said in a statement.
The most frequent target of utility criticism from consumer groups in cases like these is the “return on equity” — a way of calculating the profits returned to shareholders.
Nicor asked regulators for a bump from about 9.51% to 10.35%. Ameren’s ask was similar, 9.44% to 10.7%. Most of the reductions recommended by the administrative law judges stemmed from lowering both companies’ return on equity figures to 9.93%.
Most of the overall reduction to both rate increases comes from the lower profit rates, with reductions also stemming from cuts to things like post-employment benefits.
“The companies always claim this is about maintenance, but at the same time they’re asking for an outrageous profit rate to their shareholders,” CUB spokesperson Jim Chilsen said. “That exposes their true motivation for their rate hike requests.”
Abe Scarr, director of the consumer advocacy group Illinois PIRG, said there “really is a lot more work for the commission to do” beyond the cuts to profit rates. He said that the commission’s decision is tied up into the uncertain future of gas utilities in the state.
“Regardless of the future and exactly the pathway, there are going to be fewer customers on the gas system using less gas,” Scarr said. “If the utilities keep spending the way they’re doing, it’s going to make rates even more unaffordable for more people.”
The ICC is weighing that question in a yearslong “Future of Gas” proceeding in which advocates, utilities and businesses are advising regulators what the natural gas industry will look like as the state approaches its deadlines for reducing greenhouse gas emissions.
In the meantime, the deadline for the commission to act is Nov. 24 in the Nicor case and Dec. 1 in the Ameren case.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
