Frustrated by high rates and what they view as a lack of oversight from the Illinois Commerce Commission, some Chicago aldermen are pressing for a franchise agreement to govern Peoples Gas operations in the city.



“If the ICC isn’t going to be the backstop and defender of ratepayers in Chicago, maybe the city of Chicago needs to take up some of that work itself,” Ald. Brendan Reilly, 42nd, suggested at a hearing with Peoples Gas officials prompted by complaints from AARP members over gas bills. “I’m not happy with the costs that are being passed along. This idea that we have to accelerate deployment means higher costs passed along to us, yet somehow this company continues to post a nice, healthy dividend. I’d encourage my colleagues to study up on this parent company that’s doing awfully well while senior citizens struggle to pay their bills.”

A franchise agreement would be a first for the city and the company. Peoples Gas provides service in the Chicago pursuant to a 1855 State Charter.



“What have been the efforts made to modernize that charter?” 1st Ward Ald. Daniel La Spata asked.

“To tell you the truth, I’m unfamiliar with the charter,” Peoples Gas counsel Mara Georges said.

“It’s good that the aldermen are engaged, but we run a very capital intensive business, very, very capital intensive. Under the Public Utilities Act, these are investor-owned utilities that are required to provide reliable and safe service… A big question to think about is what is the true cost of that?” said Director of Corporate Communications Danisha Hall, arguing the company also faces stringent auditing and oversight from the ICC.

Hall and other Peoples Gas representatives pointed to a recent engineering study that found 83 percent of the company's iron pipes have an average remaining life of less than 15 years and the replacement rate hasn't been fast enough to make up for the increase in failure rates. That's why company's system modernization program hasn't led to a decrease in pipeline failure rates over the last decade.

But other aldermen echoed Reilly’s concerns that the ICC was a rubber stamp. “This makes no sense. Your company’s profitable. Your parent company’s profitable. There’s no incentive or regulation being enforced to make you do your job better,” said Ald. Maria Hadden, 49th. “There’s incentive for you to take longer, spend more money, and do it inefficiently… We do need a franchise agreement if you guys can’t do what’s in the best interest of your consumers… what we’re hearing from residents and as consumers, this is total incompetence.”

The hearing was scheduled to raise awareness for pending bills in Springfield that would eliminate a roughly $9 surcharge on gas bills to pay for infrastructure improvements.



Critics, including Illinois PIRG and the AARP, say Peoples Gas’ replacement program fails to protect the public and has led to spiraling costs that are hundreds of dollars higher than the suburbs. They also say more and more customers are cost burdened – through September 2019, Peoples Gas disconnected 9,382 residential heating customers (of the 93,000 households that received at least one disconnection notice).

Mayor Lori Lightfoot issued a statement in support of reining in “reckless gas utility spending,” saying “utility bills that our low income residents can’t afford are forcing Chicagoans to make impossible choices… I want people who helped build this city to be able to age in place and to live without constantly worrying about the next utility bill.”

Illinois PIRG’s Abe Scarr agrees that the pipes should be replaced. He says the company has only been able to keep bills relatively low because of natural gas costs.



Advocates are hopeful despite facing some headwinds for state action. “We have introduced state legislation in 2018, 2019, and 2020 but the Illinois General Assembly has yet to hold a single committee hearing on those bills," and the deadline to get them out of committee is fast approaching—even as Springfield halted business over coronavirus concerns. "State policymakers need to hear directly from you."