A record-breaking $309 million rate hike sought by Nicor would fuel “exorbitant shareholder profits” and “wasteful spending on executive bonuses” at the suburban natural gas utility, according to consumer advocates.
That’s why state regulators should cut the increase roughly in half, experts from the Citizens Utility Board, Illinois Public Interest Research Group and Environmental Defense Fund argued Wednesday.
“This company is rolling in profits and they just keep coming to the table asking for more,” CUB spokesman Jim Chilsen said. “This rate hike request is filled with fat and excess, and customers are fed up.”
Nicor proposed their hike to the Illinois Commerce Commission in January, saying the estimated $7.50 tacked onto the average monthly residential bill would fund critical infrastructure upgrades serving more than 2 million customers across northern Illinois, including most of Chicago’s suburbs.
“With safety and reliability in mind, Nicor Gas is making continued investments to ensure a secure energy supply through the replacement of aging infrastructure and technological solutions to provide more modern customer experiences,” spokeswoman Jennifer Golz said in a statement. “We continue to leverage the latest technologies to prevent, identify and mitigate operational emissions while also focusing on affordable decarbonization that includes both gas and electric solutions that can be faster, less expensive and less risky than an all-electrification approach.”
But in testimony submitted to the commerce commission Wednesday as part of the quasijudicial rate case process, advocates say the utility can comfortably cut more than $111 million from the hike in part by holding its shareholder profit rate at 9.45% instead of jacking it up to a “lavish” 10.35%.
The watchdog groups are also calling for Nicor to cut executive bonuses and rethink how it finances infrastructure projects, among other reductions.
Additional cuts recommended by Illinois Attorney General Kwame Raoul’s office and other groups would collectively slash Nicor’s overall proposed hike by $153 million.
“Nicor has positioned itself as interested in the clean-energy transition, and to their credit, they’re doing some good things,” Illinois PIRG director Abe Scarr said. “But a lot of this proposal is status quo, pouring hundreds of millions of dollars into the gas system.”
A $309 million hike would mark the largest bump in household gas prices in Illinois history, and Nicor’s fifth hike since 2017. The utility’s delivery rates have more than doubled over that period while their Atlanta-based parent, Southern Company, has reaped more than $25 billion in profits, advocates say.
Nicor’s $320 million hike request in 2023 was trimmed to $223 million by the commerce commission, which has the final say on how much utilities can charge residents. A decision in the latest rate case is expected this fall.
Nicor says natural gas is projected to cost “30% to 50% less than other fuels through 2050,” and that with the hike, their delivery rate “would remain among the lowest of any major gas company in Illinois.”
Regulators previously allowed Chicago’s natural gas supplier, Peoples Gas, to implement a record-setting $300 million rate hike including delivery costs that the utility claimed would be offset by declining energy prices. Instead, prices have spiked, leading to eye-popping bills since last month.
Meanwhile, regulators have clamped down on the maligned Peoples Gas pipeline replacement program as Gov. JB Pritzker’s administration aims to wean the state off fossil fuels in favor of renewable sources by 2050.