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Capitol News Illinois
CHICAGO – Regulators at the Illinois Commerce Commission on Thursday unanimously approved rate hikes for four major natural gas utilities, but the little-known regulatory body’s decision was perhaps more notable for what it rejected.
The five-member board flexed its regulatory muscle, slashing the utilities’ requested rate increases by as much as 50 percent.
“This was an earthquake in Illinois utility regulation,” Abe Scarr, director of consumer advocacy group Illinois PIRG told Capitol News Illinois after the Thursday meeting.
Scarr and PIRG were among the consumer advocates asking for greater regulatory oversight of the natural gas industry ahead of the requested rate increase from the four utilities that collectively serve 98 percent of Illinois’ gas customers – Nicor Gas, Ameren Illinois, Peoples Gas and North Shore Gas.
Rates will still rise next year, but not nearly as much as they would have if the commission had approved the utilities’ initial requests.
The commissioners instead sided with consumer advocates – rejecting several recommendations from the ICC’s own staff – in several key areas, including profit rates, low-income discounts and spending oversight.
Commissioners lowered Ameren’s initial ask by about 50.8 percent and cut Nicor’s request by 30.3 percent. For Peoples Gas, it was a 25 percent reduction, and for its sister company North Shore, regulators cut the request by 34 percent.
While advocates hailed the ICC’s decisions as a victory, utilities were wary.
“My initial reaction is that I’m concerned,” Matthew Tomc, who oversees regulatory affairs for Ameren Illinois, told Capitol News Illinois.
Tomc said that once Ameren staff fully reviews the ICC decision, they will consider requesting a rehearing to challenge the ICC’s conclusions.
Other companies involved in the cases indicated they were reviewing the decisions.
“Natural gas remains the most affordable energy source for winter-residential heating and is the main fuel source used by manufacturers in Illinois,” Nicor spokesperson Jennifer Golz said in a statement. “Nicor Gas provides an affordable energy source, which is more important now than ever with families facing rising costs for everything. resources as an energy.”
Nicor and Peoples Gas have not released cost estimates under the new rates approved Thursday. But downstate Ameren Illinois says costs will remain similar to last winter, echoing claims made by Peoples Gas earlier this year.
The commission lowered the expected rate hikes by leveraging one of its most powerful tools: deciding companies’ profits through their “return on equity” or ROE.
Ameren and Nicor both requested ROE rates above 10 percent, while Peoples Gas requested a 9.9 percent figure. But consumer advocates pushed back on those asks. For example, the Citizens Utility Board, one of several groups that argued for lower rates, requested a range centered on 9.5 percent for Ameren and Peoples Gas and 9.4 percent for Nicor.
But in a surprising move, the Commission set rates in the cases at or below that recommendation. Nicor Gas will operate with a 9.51 percent ROE, and Ameren will operate with a 9.44 percent ROE. Peoples Gas and North Shore Gas will operate with a 9.38 percent ROE.