CUB Applauds Appellate Court Ruling That Strikes Down Peoples Surcharge

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Oct 03, 2011, 04:09 ET

CHICAGO, Oct. 3, 2011 /PRNewswire-USNewswire/ -- An Illinois Appellate Court ruling that bans Peoples Gas from hitting customers with an illegal surcharge is a big victory for Chicago households, potentially saving them millions of dollars on their heating bills, the Citizens Utility Board (CUB) said Monday.

Illinois Attorney General Lisa Madigan's office and CUB had argued that the surcharge, called the Infrastructure Cost Recovery (ICR) rider, was unnecessary as well as illegal. Rider ICR covered replacement of the company's cast-iron main system—work that Peoples Gas has been required to do for decades.

CUB argued that Peoples Gas already had the ability to recover such costs through traditional 11-month rate-hike cases, and the rider approved last year by the Illinois Commerce Commission (ICC) merely served as an end-run around the regulatory process.

Peoples has begun to charge the rider, but the issue now goes back to the Illinois Commerce Commission (ICC) and there was no immediate word on when the charge would be removed from bills. The financial impact also was unclear, but the Appellate Court ruling, issued late Friday, is expected to save consumers millions of dollars.

"This is excellent news for Chicago consumers who are on the verge of another expensive winter," CUB Executive Director David Kolata said Monday. "We're glad Attorney General Madigan and CUB helped stop this charge. But we still have work to do, fighting a new $120 million rate increase proposed by Peoples and North Shore Gas."

The ruling was connected to a January 2010 ICC decision that approved the rider along with a $70 million rate hike. Since then, Peoples and its sister company, North Shore Gas, have requested a new $120 million increase. The ICC is set to rule on that case in January 2012.

Peoples Gas had argued the new charge would make it easier to accelerate the replacement of Chicago's gas mains. But the company had not committed to any concrete plans for future investments and the pace of the company's replacement program had slowed dramatically in recent years—casting doubt that the new charge was really needed.

In general, CUB opposes such riders. The consumer group argues that they circumvent the regulatory process, allow utilities to pass on to customers costs without going through a traditional 11-month rate case, dump an unfair financial burden on consumers, and don't give companies any incentive to operate more efficiently.

In addition, CUB argued that the ICR rider was illegal, because Illinois law bans "single-issue ratemaking" and requires the ICC to review all costs before they can be passed on to consumers.

CUB is Illinois' leading nonprofit utility watchdog organization. Created by the Illinois legislature in 1983, CUB opened its doors a year later to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure refunds. For more information, call CUB's Consumer Hotline at 1-800-669-5556 or visit www.CitizensUtilityBoard.org.

SOURCE Citizens Utility Board