The Illinois Commerce Commission slashed a proposed $314 million rate hike by suburban gas company Nicor by nearly half Wednesday.
Nicor had asked to sharply raise rates by $314 million for infrastructure upgrades and “affordable decarbonization that includes both gas and electric solutions” for its more than 2 million customers across much of the suburban Chicago area.
But after state utility staffers recommended cutting the hike by a third, the ICC found Nicor’s ask was extreme and approved the hike for $168 million, reducing the proposed increase by 47%.
“The ICC’s responsibility is to balance the interests of Illinois’ utilities and their consumers,” ICC Chairman Doug Scott said in a news release. “We recognize that any decision impacting Illinoisans’ bills is not a small one, and after careful review of Nicor’s proposed investments, the Commission opted to strike excess charges and approve necessary and justified projects.”
Last month, two administrative law judges for the commission agreed the amount was exorbitant and suggested the company could meet safety and supply standards for around $209 million.
The proposed increase, suggested earlier this year, would have broken records and raised the average residential bill by around $7.50. Consumers will still see a bump in their bill starting in December, but consumer advocates see the ICC order as a “big step in the right direction,” said Citizens Utility Board communications director Jim Chilsen.
Nicor, whose parent firm Southern Company didn’t immediately return requests for comment, has upped rates five times since 2017, resulting in a more than 110% increase since then, said Abe Scarr, director of the Illinois Public Interest Research Group.
“They’re going to get their December gas bill, which will be the first bill under the new rates, and that’s going to be higher than it would otherwise,” Scarr said. “It’s going to be a lot higher than it would have been back in 2017.”
For consumers, that increase can mean being forced to decide between paying for one necessity or another, Chilsen said.
“We’re concerned that there will be far too many people making difficult decisions this winter, on whether to pay for heat or other necessities like food and medicine,” Chilsen said.
The ICC also lowered the proposed return on equity from 10.35% to 9.6%, marking another win for consumer rights advocates, though they would want to see the profit margin even lower at 9.45%, Chilsen said.
“I think that exposes a true reason why they were asking for these rate hikes,” he said. “They wanted to gain fatter profits. Everybody agrees that they need to maintain their system, but they shouldn’t do it by bankrupting their customers.”
The order was also welcomed by environmental advocates, who maintain Illinois and other states need to move away from gas as a source of energy.
“[The ICC] set strong guardrails that push utilities to pursue cleaner, more affordable alternatives instead of doubling down on yesterday’s gas infrastructure,” Curt Stokes, senior attorney for the Environmental Defense Fund, said in a news release.
In the same meeting, the ICC cut a proposed rate hike from downstate power company Ameren and ordered staff to analyze the practice of line extension allowances, in which current customers subsidize the cost of adding a gas line for new customers. Many states have outlawed that practice, and Scarr said this move could indicate Illinois doing the same in the future.