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Advocates rallied outside of Chicago City Hall in October 2023 calling for the Illinois Commerce Commission to cut proposed rate hikes from the state’s four largest gas utilities.

Juanpablo Ramirez-Franco

Illinois utility spending will greatly increase consumer bills, a new report warns

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Illinois ratepayers could see their gas bills soar over the next decade unless officials hit the brakes on spending from the state’s major gas utilities.

A new report from the Building Decarbonization Coalition and Groundworks Data investigated what could happen if Peoples Gas, Nicor Gas, North Ameren Gas and North Shore continue to double down on a natural gas infrastructure system that flies in the face of the state and nation’s climate goals.

“Under the business as usual framework, customer rates in Illinois are on a trajectory to increase a good 50% by 2030,” said Dorie Seavey, a senior research scientist with Groundworks Data and primary author of the report. “And for most companies it is likely to double by 2035.”

Without meaningful intervention, that means the average residential bill could climb to approximately $650 a month during the coldest months by 2050.

Between 2014 to 2022, the state’s four largest gas utilities turbocharged their spending on gas infrastructure by more than $9 billion. Ratepayers will be paying these costs off for the next 40 to 70 years, according to the report’s authors. They warn that if state officials do not curb utility spending, “Illinois is on course to maintain its entire gas system indefinitely.”

There’s a direct line between what a utility spends and what ends up on a utility bill. Investor-owned utilities, like Peoples Gas, don’t turn a profit on selling fuel or energy. Instead, they’re authorized to recoup a rate of return on equity of just over 9% on their investments on massive infrastructure projects and upgrades. The costs of upgrades to the state’s network of thousands of miles transmission lines, distribution lines and underground storage — Illinois alone is home to over tenth of the nation’s total gas storage capacity — are spread across ratepayers over decades.

Keeping up with natural gas isn’t just getting more expensive for ratepayers. It’s also taking a huge toll on the climate.

Natural gas is primarily composed of methane, a greenhouse gas that can capture 80 times more heat than carbon dioxide for the first few years of its life cycle. Illinois ranks eighth in the nation for natural gas consumption, according to the U.S. Energy Information Administration. State and local leaders are pursuing policies to phase it out.

In 2021, Gov. JB Pritzker signed the Climate and Equitable Jobs Act, commiting the state to 100% clean energy by 2050. The law effectively sets a hard deadline to sunset the use of coal and natural gas power plants from the state’s power sector. It does not set any decarbonization targets for cutting natural gas from buildings. In Illinois, more than 80% of residents rely on natural gas to keep their homes warm.

Chicago’s City Council is following the lead of suburban Oak Park and pursuing an electrification ordinance that would phase out gas hookups in new construction. The ordinance is currently facing pushback from organized labor and gas utilities alike.

But as Illinois takes its first strides into an electrified economy, a big question mark hangs over who is left holding the bag when the gas customer base begins to split. When there aren’t enough customers to cover utility spending or even utilize the state’s immense gas system, Seavey calls that a “stranded asset,” or a liability — in this case, a massive one.

“Illinois can expect stranded asset risk on its books on the order of $80 billion by 2050,” Seavey said. That’s a sixfold increase. Right now, the unrecovered assets on the books of the gas companies are about $13.4 billion.

In Chicago alone, about 30% of gas customers are collectively $125 million in debt to Peoples Gas, according to Sarah Moskowitz, the executive director of the Citizens Utility Board. Utility spending at the current rate is already causing enough undue stress to communities across the state, she says throwing more money at utilities will only make it worse.

“Our state is already in the midst of an unmanaged gas transition,” Moskowitz said. “And an unmanaged transition is the most expensive kind of transition.”

The report comes as the Illinois Commerce Commission begins the second month of its Future of Gas proceedings, a series of public workshops evaluating how the current gas distribution system will have to adapt to meet the state’s decarbonization target.

As part of the ongoing proceedings, the ICC will hear the report Monday during a special briefing.

Juanpablo Ramirez-Franco covers climate change and the environment for WBEZ and Grist. Follow him on X at @__juanpab.

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