Peoples Gas rate hike used to pay for questionable expenses, annual report shows

ByAnn Pistone and Jason Knowles

Wednesday, July 10, 2024

Is the Peoples Gas rate hike being used for questionable expenses?

The I-Team found the Peoples Gas natural gas rate hike is being used to pay for things like attorneys fees, and memberships to organizations and clubs

CHICAGO (WLS) -- The recent natural gas rate hike passed by Peoples Gas, and passed onto customers, is being used to pay for things like attorneys fees, and memberships to economic organizations and social clubs. State legislation has now been introduced to change the current law and prevent utilities from this practice.

"For one bill to be sucking up all my loot, makes it hard for me to pay my other bills," said Ervin Johnson who struggles to keep up with his gas bills.

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Johnson lives alone in his West Englewood home and said the heat costs soar in the winter.

"The radiators upstairs are off. I don't even go upstairs. I just use this first level," he said.

Johnson's bills range from $60 to $300 per month.

Peoples Gas looked into Johnson's service and said his bills are accurate. The company said sometimes higher bills can be attributed to not having an energy efficient home.

Johnson's bills went up more since just over $300 million in rate hikes were approved by the state. That hike and another smaller one is costing consumers roughly $8 per month. At the same time, the watchdog group Citizens Utility Board is bringing attention to spending by the utility.

"I thought I was just paying for gas service," Johnson said.

The I-Team examined recent financial disclosures which are part of the utility's annual report. Peoples Gas expenses include dues for industry associations, and money going to attorneys who help get their rate hikes passed.

"Their customers are held captive here and they are charging them for things that are actually against their own customers' interests," said Sarah Moskowitz, executive director at Citizen Utility Board.

CUB pointed to Peoples Gas charging customers more than half of the $5 million in fees they paid outside attorneys who worked to get the utility's rate raised in December, which they are allowed to do under state law.

Peoples Gas was also able to recover, $42,000 last year, from consumers for memberships in professional organizations like chamber of commerce groups. By law, they are not recovering the cost of memberships in executive clubs and country clubs. Peoples Gas said those are paid by company shareholders.

"One-hundred-sixty-three thousand of our neighbors are struggling to keep up with their bills, the debt across all of those customers is $110 million," said Moskowitz.

Peoples Gas said rate hikes are needed to cover costs to modernize its antiquated pipe system, but some state lawmakers want to make sure other costs don't get passed on to consumers.

"They are making record profits. They need to do their share," State Representative Theresa Mah said.

She sponsored pending legislation that would bar utilities in Illinois, from charging consumers for membership dues, charitable contributions and other legal expenditures to raise rates.

"Ratepayers should not be on the line for expenditures that have nothing to do with them and really benefit the utility companies," said Mah.

In a statement to the I-Team, Peoples Gas said, "We support the communities we serve, including support for...economic development organizations across every neighborhood in Chicago."

Regarding the recovery of legal fees, the utility told the I-Team, "All participants use legal experts, and Illinois laws and regulations determine what costs are recoverable. The ICC closely examines every cost to ensure it's appropriate."

But Johnson doesn't like it.

"If you are billing me for uses, other than your services, then no, it's not fair," he said.

The most recent rate hikes are already in effect and consumers have already seen the increase in their bills.

Peoples Gas said consumers can save money by making their home more energy efficient.