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Appeals court won't turn off ICC approval of Peoples Gas plan that is jacking up monthly bills

State Court

By Dan Churney | Jul 9, 2019

Illinois First District Appellate Court

CHICAGO -- A state appeals panel has refused to shut off an order by the Illinois Commerce Commission that allows Peoples Gas to implement a modernization program that is driving up natural gas costs for most of Chicago.

The court agreed with the ICC the agency has little power to restrict the company's spending on the projects.

The decision was delivered June 28 by Justice Cynthia Cobbs, with concurrence from presiding Justice James Fitzgerald Smith and Justice Nathaniel Howse Jr., of Illinois' First District Appellate Court. The ruling was filed as an unpublished order under Supreme Court Rule 23, which means it cannot not be cited as precedent except in the circumstances allowed by the rule.

Illinois Attorney General Kwame Raoul

The decision upholds the ICC's approval of expenditure plans by Peoples Gas to update gas delivery, over objections from Illinois Attorney General Kwame Raoul. The dispute revolves around interpretation of the part of the Illinois Public Utilities Act, which deals with utility infrastructure projects paid by passing the cost on to customers.

Peoples Gas supplies natural gas to 95 percent of the homes and businesses in Chicago, according to court papers. In 2015 the company asked the ICC to authorize a program to replace gas lines and to recover part of the cost by charging more from customers. In 2013 the Illinois General Assembly passed a law, sought by Peoples Gas, allowing gas companies to add a rider on monthly bills to pay for pipe replacement. The law expires Dec. 31, 2023.

Peoples Gas had been replacing aging pipes for years but about a decade ago it decided to change out all pipes by 2035-2040, at a price tag of $8 billion to $11 billion, according to published reports. The company has 4,400 miles of pipe, of which 1,800 miles need to be replaced.

The Illinois Public Interest Research Group, a consumer advocacy organization, has said the average customer annually pays an extra $75, on top of their regular bill, for updated work, but this amount could climb to $750 more in the next decade. 

The ICC found it was not empowered to limit the total annual spending rates for the modernization project, and can only ensure designated maximum limits for recovery of cost by Peoples Gas are not exceeded.

The attorney general argued the ICC has the authority and wants the commission to revisit the Peoples Gas case and curb customer costs, by modifying the scope and pace of modernization spending. The ICC can modify or deny rate funded expenditures considered "unjust, unreasonable, or imprudent" —as Cobbs worded the attorney general's argument — even if the cap on expenditures has not been reached.

Cobbs was not persuaded.

"Contrary to the attorney general’s assertions, there is language written into the statute which supports finding that the commission lacks discretion to make predeterminations of justness and reasonableness and instead is required to approve the tariffs as submitted," she wrote.

Cobbs also pointed out the Utilities Act does not direct the ICC to “investigate and make determinations" as to what is right. In addition, the ICC's power to adjust cost recovery rates is restricted to making sure statutory limits are not exceeded, Cobbs said.

The Illinois attorney general has been represented by Christopher Turner of the attorney general’s office.

The commission has been represented by Thomas Stanton, a special assistant attorney general.

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