Record Peoples Gas profits, record rate hike show need for Clean and Affordable Buildings Ordinance

If so many Chicago families weren’t in financial pain, it would be laughable to hear Peoples Gas executives try to justify their request for a record $402 million rate hike.

While Peoples has raked in six straight years of record profits, the utility has jacked up customer bills and exploited Chicago families to cover its chronically mismanaged, behind-schedule, over-budget pipeline-replacement program. Disturbingly, nearly 1 in 5 Peoples Gas customers are behind on their bills by a total of about $100 million, with Black and Brown neighborhoods getting slammed the hardest. In Englewood, for example, nearly half of all customers can’t afford to pay, and the average debt has topped $1,000.  

And now, Peoples Gas threatens to make a bad situation worse by pushing the Illinois Commerce Commission (ICC) to OK the largest gas hike in Illinois history to continue its reckless spending spree and inflate its profit levels.

The current crisis is exactly why Chicago desperately needs a Clean and Affordable Buildings Ordinance (CABO) that would require newly constructed buildings to heat with electricity rather than gas. The problems with Peoples Gas are so severe, we’re urging the City to introduce an ordinance. It would be the first step in a long-term transition away from the dirty, dangerous and expensive fossil fuel. This won’t happen overnight, but it’s urgent we begin planning the transition now–for the sake of our bottom lines, as well as our health and climate. 

Of course, Peoples Gas is doing everything it can to defeat this necessary first step, playing a delay game to protect its profits. Aside from its record rate-hike request, for the last decade Peoples has capitalized on a state law that allows it to hit customers with an escalating surcharge to pay for a program to replace old pipes throughout Chicago. That’s been a gravy train for the utility: Customers now pay an outrageous $40-$50 a month in fixed charges, on average, before they even use any gas. And sadly, the utility has also profited off our affordability problems, making millions on late fees it charges customers. 

Auditors, consumer advocates and elected officials have decried the pipeline program for its financial waste and operational futility. The projected costs have spiraled from $2 billion to a staggering $11 billion, but Peoples Gas has failed to achieve safety improvements in proportion to the billions it has burned. (A 2020 engineering study found no “noticeable reduction in pipeline failure rates.”)

Instead of sinking more of our money into an unsustainable fossil fuel system that is heading toward its own extinction, we must start planning for a cheaper and cleaner way to heat our homes. A Clean and Affordable Buildings Ordinance (CABO) would help the city catch up with where the consumer market has already progressed.

Last year, electric heat pumps–an alternative to traditional heating equipment–outsold gas furnaces in the U.S. And earlier this year, CUB and its partners were forced to temporarily pause our ground-source heat pump program, “Grow Geo Chicagoland,” because consumer interest vastly exceeded our expectations. Cold climate heat pumps are now a proven technology. These systems are 50-60 percent more efficient than a gas furnace or boiler, and a CUB study found that Chicago homeowners could enjoy lifetime savings of about $25,000 to $50,000 by switching from gas to heat pumps. Consumers like to save money, so this transition is already underway–and new rebates and incentives will doubtless accelerate it.

It’s wise to plan for this inevitability. Allowing the current affordability crisis to continue raises the very real possibility of a utility “death spiral.” That’s where fed-up customers electrify their homes and leave Peoples Gas, forcing lower-income customers to shoulder the growing costs of maintaining the utility’s outdated system. We must assure that the most vulnerable customers benefit from this transition.

The defeat of the Peoples Gas rate hike, coupled with passage of a Clean and Affordable Buildings Ordinance, is a cohesive strategy to save consumers money now and over the long run.  It’s time to tell the bigwigs at Peoples Gas to put that in their pipes and smoke it.

Sarah Moskowitz is the new executive director of the Citizens Utility Board, or CUB. CUB is the nonprofit consumer group with a mission to fight for lower utility bills in Illinois.