Controversial Peoples Gas Pipe Replacement Program can move forward with reforms: ICC

CHICAGO (WLS) -- A controversial pipeline replacement program was approved to move forward Thursday, but with reforms.

The Illinois Commerce Commission halted the Peoples Gas Pipe Replacement Program two years ago because of high cost concerns and fears that cost overruns would be passed onto consumers.

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A ruling Thursday determined the program will move forward with safety monitoring.

Peoples Gas says some pipes in Chicago date back to the 1800s, and need to be replaced. The company said safety experts support the plan.

But critics at the consumer group Citizens Utility Board say budget has bloated over the last several years from around $1 billion to potentially more than $12 billion. Some of those costs are passed on in rate hikes.

Peoples Gas estimated the current cost of the project to be $10.5 billion.

Consumer watchdogs at Illinois PIRG say new reforms will drive costs of the project down, which can help lower bills.

"We've been concerned for a long time that this program is runaway costs and the customers are not getting value from those investments," said Abe Scarr, with Illinois PIRG. "Anytime a utility makes investments in the system, if it is approved by regulators, has the right to recover those costs with an added profit margin on top of that."

Consumer groups also say safety concerns will be addressed by having Peoples Gas focus first on the pipes that are in the most need of being replaced, instead of a larger systemwide approach.

"Now, the utility has some specific direction to focus efforts and funds towards work that is necessary and targeting pipes most at risk," said Sarah Moskowitz, with the Citizens Utility Board.

The ICC also set a new deadline for the project to be complete, moving it up from 2040 to 2035. The state said it aligns with multiple recommendations from engineering experts and ICC staff.

At one point there was a special fee on Peoples Gas bills, which went to pay for the program.

That fee is gone, but even with the new regulations, consumers may start to see higher bills in the future.

The ABC7 I-Team has been covering the story for over 10 years, including how it could affect consumers' gas bills.

Peoples Gas said in a statement:

"For more than a decade we worked to replace old, leaky pipes in a systematic way that improves the safety and reliability of Chicago's heating system. The Commission paused that work at the end of 2023, and has now lifted the pause. As we wait to receive the full Final Order and review it, the Commission made clear it wants us to focus on replacing more than 1,000 miles of pipes by 2035. This direction given by the Commission, compared to the prior approach, may necessitate additional cost and more construction sites disrupting streets across city neighborhoods."