Supporters say Illinois legislation could slow rate hikes for natural gas customers
Editor’s note: This story was updated at 8:51 a.m. Tuesday with additional information from Ameren Illinois.
Consumer advocates and Illinois lawmakers pushed for legislation Monday they say would help “slow or stop” some future natural gas rate hikes.
The legislation would eliminate a surcharge the General Assembly approved in 2013 to help utilities pay for critical infrastructure improvements, said state Rep. Joyce Mason, a Democrat from Gurnee near Chicago.
The companies have since used the surcharge as “a blank check,” Mason said at a news conference Monday. Eliminating the fee wouldn’t save customers money immediately, but it could prevent large and rapid rate hikes in the future, said Abe Scarr, director of the Illinois Public Interest Research Groups, a consumer advocacy nonprofit.
“We’re going to slow or stop those big increases. Unfortunately we are not in a position to retroactively take this off the bills,” Scarr said.
The surcharge, which appears on utility bills as the “Qualified Infrastructure Plant,” or QIP, is slated to expire at the end of 2023. The legislation would eliminate it in 2022 for Ameren, Peoples Gas and Nicor Gas customers.
The surcharge has helped Ameren comply with new safety regulations, in particular those involving high pressure gas lines. Since 2013, Ameren Illinois replaced more than 450 miles of pipeline and more than 60 natural gas regulator stations, employing hundreds of workers, according to spokesman Tucker Kennedy.
The QIP surcharge helped Nicor Gas make more than $2.5 billion in infrastructure investments, according to spokesperson Jennifer Golz. Another 187 projects across a hundred communities are scheduled for this year, she added.
“These improvements along with Nicor Gas’ storage facility reserves have allowed the company to deliver natural gas safely and effectively to our 2.2 million customers,” Golz said in an email.
The surcharge’s monthly cost for customers varies, but it costs Donna Carpenter, a parent from Englewood, $18 a month, she said. Carpenter is a member of the community organizing group POWER-PAC IL.
“If they can get rid of that surcharge that would be a tremendous help to my family because right now, it’s just ridiculous and I can’t afford it,” Carpenter said.
The surcharge enables utilities to spend more than they need to, which translates to profits, Scarr said. While it can take utilities years to recover costs under a traditional rate increase, they can recover costs quicker under the QIP surcharge. The utility can start collecting costs the month after an improvement takes effect, such as a new gas line coming online, Scarr said.
The Illinois Commerce Commission reviews Ameren’s infrastructure investments to ensure they’re reasonable and economical, Kennedy said. The utility would make investments anyway “because they are upgrades that need to be made,” he said.
“It’s hard to put an exact dollar amount” on the amount consumers might eventually save, said Bryan McDaniel, director of governmental affairs for the Citizens Utility Board, a consumer advocacy group. It might stop utilities from hiking the QIP rate on top of other rates, McDaniel said.
For instance, the surcharge contributed to a $76 million gas delivery rate increase for Ameren customers approved in 2020, according to Scarr. Without the QIP rate, that increase might have been smaller. The increase amounted to roughly $2.80 per month for a typical customer beginning January 2021, Kennedy said.
“Unfortunately this bill is not going to cut people’s bills in half,” McDaniel said, “but it is going to slow down the pace of their spending going forward.”
Meantime, Illinoisans are struggling to pay their heating bills, said Jeff Scott, associate state director of AARP Illinois. Increased natural gas prices have contributed to higher bills.
“We consistently hear from our members that their utility bills force them to make extremely difficult decisions,” Scott said. “Many of our members are on fixed incomes and they must make unfortunate decisions between other necessities such as food, medicine, rent or just simply taking care of themselves and loved ones.”
The legislation is sponsored by Mason and Democratic state Sen. Cristina Castro of Elgin, as well as state Rep. Katie Stuart, a Democrat from Edwardsville.
The bill has been brought up in previous General Assembly sessions but never gone anywhere. Castro said she hopes it has a chance this year because “the timing is right.”
“This is an opportunity for us to bring all the stakeholders in the room, have a robust conversation,” Castro said.
Unions, which can benefit from utility infrastructure improvement jobs, will be part of that conversation, Mason said.
“There are lots and lots of opportunities to continue to work on this infrastructure,” Mason said. “This bill is about oversight. It’s not about stopping critical work and it’s not about eliminating jobs at all.”
The bill could take until April to be considered by both chambers, Mason said.
This story was originally published February 1, 2022 at 7:00 AM.
