Nov. 16–A forecast that combines colder-than-expected weather and a short supply of natural gas means Chicago-area utility bills may increase more sharply this winter than in recent years.
For millions of suburban residents, a requested $230 million delivery rate increase from Nicor Gas could mean even higher prices next winter — adding $5.36 more per month to most residential bills.
The one-two punch is unlikely to sit well with Nicor’s 2.2 million customers in suburban Chicago and across northern Illinois.
“This is the biggest natural gas rate hike request we’ve ever seen in Illinois,” said Jim Chilsen, a spokesman for the Citizens Utility Board, a nonprofit Illinois watchdog group.
Nicor previously won a $93.5 million rate hike in January. CUB plans to fight the new proposed rate increase, Chilsen said.
Natural gas futures surpassed $4 per million British thermal units this week — the highest price in several years — on concerns that an increasingly colder winter forecast and low storage levels could spark an imbalance between supply and demand.
Consumers in the Midwest are projected to spend 14.5 percent more on natural gas this winter, the largest percentage increase of any region, according to the U.S. Energy Information Administration.
“Nobody ever likes to hear about an increase in the price of gas, and nobody likes to hear that their gas utility is proposing to increase rates next year by $230 million,” Chilsen said.
Naperville-based Nicor filed its rate increase request last week with the Illinois Commerce Commission, which is expected to rule on it in about 11 months — just in time for next winter.
The utility said the $230 million request includes “significant capital investments” to modernize its distribution, transmission and storage infrastructure.
Jennifer Golz, a Nicor spokeswoman, said two-thirds of the rate request would be used for everything from replacing aging materials to installing new equipment at two 40-year-old storage fields that are “near the end of their service life.”
If the full rate request is approved by the ICC, Nicor’s residential customers would see most of the increase added to their $16.06 fixed monthly customer charge, which would jump to more than $20 per month.
Peoples Gas, which was acquired by Wisconsin Energy in June 2015, has 845,000 customers in Chicago. The utility last filed for a rate increase in February 2014, receiving approval for a $71 million increase in February 2015.
There are no plans to file for a rate increase at this time, Peoples Gas spokeswoman Vanessa Hall said Thursday.
Peoples Gas has its own history with costly infrastructure improvement programs. In 2011, the utility launched a multibillion-dollar, 20-year program to replace 2,000 miles of aging pipe below Chicago’s streets that was plagued by budget overruns, delays and charges of mismanagement.
Customers paid an average of $8 per month to fund the project in 2015, the company told the Tribune at the time. Peoples Gas was unable to provide a current breakout Thursday.
In 2016, Peoples Gas agreed to pay $18.5 million for misleading consumers about the cost of its gas pipe program, and a portion of the proceeds appeared as a $12 credit on customer bills.
Nicor and its customers may be somewhat insulated from the spiking natural gas prices, with underground storage supplying about one-third of its normal winter deliveries, Golz said.
“Our natural gas storage systems are a critical safety net to protect against fluctuations in supply and demand,” Golz said. “We’re able to buy gas for customers when prices are lowest, store it for later use and pass on those savings directly to our customers.”
But the $230 million rate request, if approved by the ICC, would trickle down to customer bills every month, regardless of gas prices.
“This will be a hardship to some customers, and it’s going to be annoying to all customers if they would get that full rate hike,” Chilsen said. “That’s why we’re going to do everything we can to fight it.”
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