Taxpayers will pay for the assets of a delivery system that will be obsolete


SPRINGFIELD – Illinois natural gas utilities have warned of job losses and possible public safety risks if state lawmakers repeal a law allowing them to add a surcharge on bills customers which consumer advocates claim is used to defraud customers.

“It provides about 500 good jobs a year and creates opportunities for various entrepreneurs,” Eric Kozak, vice president of gas operations for Ameren Illinois, told a House committee on Wednesday. “And the modernization of the system sets the stage for the State of Illinois to become a leader in the use of renewable natural gas, synthetic natural gas and even hydrogen, which can attract new businesses and retain industry.”

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At issue is a 2013 amendment to the Utilities Act that allows large natural gas utilities — those serving more than 700,000 customers — to add a surcharge to customer bills to recoup costs associated with investments in “Qualifying Infrastructure Installations”, or QIPs.

These include return on investment and write-offs related to things like replacing old gas lines and leaky meters. These surcharges are subject to review by the Illinois Commerce Commission, but only to determine whether they are allowable under the law.

The commission also has the power to review a company’s actual expenses to determine if customers have been overcharged and should be reimbursed.

That law is set to expire at the end of 2023, but House Bill 3941 would move that date up a year, to December 31, 2022.

“Over the past decade, through rate formulas and QIP, Illinois has removed regulatory protections, increasing the incentive for utilities to spend money to make money and raise rates as fast as possible,” said Abe Scarr, director of the Illinois consumer advocacy group. PIRG. “Utilities have responded to these incentives with billions of dollars in wasteful spending. It’s not surprising. This is exactly what we should expect. The question now is how will the General Assembly react? »

As an example, Scarr cited Naperville-based Nicor ​​Gas, the state’s largest natural gas distribution company, which he says has raised rates 77% over the past four years. . This came after Nicor’s rates had risen only 28% in the previous 37 years.

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“Rate increases and utility profits are largely driven by capital spending,” he said. “Nicor’s capital expenditures have risen sharply since it started using QIP in 2015. Since then, QIP has accounted for half of Nicor’s capital expenditures, making it a major contributor to rate hikes. company massive.

Consumer groups like the Illinois PIRG have been calling for its repeal for years, to no avail. But this year, with natural gas prices rising across the board and amid a global push to move away from fossil fuels to fight climate change, advocates believe they have a better chance.

“Unless the General Assembly ends this unnecessary surcharge now, ratepayers will be forced to pay for the stranded assets of a gas distribution system that will eventually become obsolete and not part of the future of the clean energy this legislature envisioned when it passed the Clean Energy Jobs Act and called on taxpayers and utility companies to move away from carbon- and methane-producing energy,” said attorney Karen Lusson. at the National Consumer Law Center.

Utility executives, however, have argued that rising global natural gas prices, not surcharges, are the primary source of rising customer bills.

“Ninety percent of today’s high prices are driven by global demand and prices, not this act,” Kozak told the committee.

Patrick Evans, president of the Illinois Energy Association, recalled that the surcharges came in part in response to a natural gas pipe explosion in San Bruno, California, in 2010 that killed eight people, left 58 wounded and destroyed 38 houses.

“At the time, Ray LaHood of Illinois (former congressman) was secretary of transportation,” Evans said. “And in response to this tragic incident, he actually issued a formal call to action, asking all natural gas utilities across the country to begin accelerating their pipeline replacement program to ensure that these incidents are minimized in the future.”

He said it led to negotiations between industry and lawmakers that resulted in an agreement to end what he called the “regulatory lag” between when a company invests money for system improvements and when it recoups those investments.

“That term simply means that we recover our investments faster than the traditional method, which requires us to go to the (Illinois Commerce) Commission first,” he said. “It doesn’t eliminate the commission’s oversight. We will always have to prove our investments to the commission. The standards have not changed. »

Patrick Whiteside, Nicor ​​Gas’ senior vice president of operations, said the surcharge has helped the company improve the safety and reliability of its entire system.

“Nicor ​​Gas’ system was able to support our customers and communities through the 2019 polar vortex, the largest energy delivery ever on our system, with no service interruptions or pressure situations for our customers,” he said. “By replacing poorly performing materials, we drive down price trends and reduce system-wide greenhouse gas emissions.”

But JC Kibbey, a clean energy advocate with the Natural Resources Defense Council, noted that his own personal gas bill from Peoples Gas in January had an extra $15, more than the company had previously said it would. ‘it would cost in a year, and had over $95 in total infrastructure costs.

“These big charges are worrying, and so are what they pay,” he said. “They are building a gas system to burn methane, fossil fuels, largely in our homes. To be clear, this gas is no more natural than coal. Burning gas harms health by releasing carbon monoxide and other pollutants into the air and our homes. This pollution disproportionately harms underserved communities and people of color.

The committee did not make a decision on the bill, which was only on the agenda for discussion.

In a separate email, Abe Scarr of the Illinois PIRG acknowledged that getting the bill through the General Assembly was a “long shot”. But he said he hoped the concerns raised by his group and other advocates would dissuade lawmakers from extending the surtax beyond its current expiration date of 2023.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.


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