Last winter’s heating costs were bad. This year could be worse, with gas bills in the Chicago area expected to climb another 30% | Illinois

It could cost hundreds of dollars more to stay warm this winter in Chicago and the suburbs, with rising natural gas prices and ongoing taxpayer-funded repairs expected to push bills up to 30% compared to last year.

Residential customers of Peoples Gas, North Shore Gas and Nicor ​​Gas will all likely feel higher prices as temperatures drop, adding to broader inflationary pressures weighing on many households.

“It looks like winter is going to be very tough on consumers,” said David Kolata, executive director of the Citizens Utility Board, an Illinois nonprofit watchdog group. “Gas prices are significantly higher than they were a few years ago.”

Natural gas prices have soared over the past two years, due to supply disruptions, an extreme cold snap in 2021 and the Russian invasion of Ukraine in February, analysts say of the sector. For many Chicago-area customers, delivery costs added to infrastructure bills have exacerbated natural gas price increases, Kolata said.

Peoples Gas, which has about 880,000 customers in Chicago, and North Shore Gas, which has about 164,000 customers in the northern suburbs, predict that bills for typical residential customers this winter will increase by $60 per month compared to winter. last, when natural gas prices soared to a 13-year high.

This means Peoples customers can expect to pay an average of around $260 per month and North Shore customers over $240 per month this winter. Peoples and North Shore are owned by Milwaukee-based WEC Energy Group.

Naperville-based Nicor ​​Gas, which is owned by Atlanta-based Southern Co., has 2.3 million customers in suburban Chicago and northern Illinois. The utility expects residential bills to rise this winter by about $34 a month from last winter, with the typical customer paying an average of about $187 a month from November through March.

Last month, the US Energy Information Administration released its Winter Fuels Outlook, which forecast that US households that heat primarily with natural gas will spend an average of 28.5% more this winter than last winter. The Midwest will see the largest predicted increase, with natural gas customers paying nearly 33% more to heat their homes this winter.

Residential gas bills include both supply and distribution charges. Although utilities don’t make money from the supply side – the natural gas itself – they are responsible for supplying it as efficiently as possible, in order to limit the cost paid by customers.

The price of natural gas for Peoples Gas customers is around 71 cents per therm in November, down slightly from a year ago, but up 155% from November 2020, when it was about 23 cents per therm, according to the Illinois Commerce Commission, which regulates gas companies.

At North Shore Gas Condominium, the price per therm in November is around 72 cents, up 87% from November 2020.

The biggest increase in the cost of natural gas is for Nicor ​​customers, who are paying $1.14 per therm this month, up 307% from November 2020. Supply costs have risen so much that they now account for more than 70% of the typical residential bill, up about 50% from previous years, according to Nicor ​​spokeswoman Jennifer Golz.

“While we cannot predict the future with current market conditions and inflation uncertainties, we expect our monthly gas supply cost to moderate as the wholesale market moderates,” Golz said in an email Wednesday.

While the fluctuating cost of natural gas is passed directly to customers, the cost of delivering it to homes is determined by the individual utility.

In November 2021, the CCI granted Nicor ​​a $240 million tariff increase to modernize its distribution, transmission and storage infrastructure. The approved increase adds about $3.70 per month to a typical residential customer’s bill, Golz said.

Meanwhile, Peoples Gas customers are paying about $15 a month to fund the utility’s massive, long-running pipeline replacement program, a line item on the bill that’s about $2 more than a year. last.

“It’s creepy,” Kolata said. “It’s about $15 a month now, and that’s a big part of the bill. We’re now at the point where the fixed charge for Peoples Gas customers is between $45 and $50, and that’s before you use any gas.

Launched in 2011, the system’s modernization program to replace 2,000 miles of aging iron pipes under Chicago’s streets was plagued from the start with delays and budget overruns. A decade later, the pipeline replacement program is complete for the third time, and Peoples Gas says it will take until 2040 and cost around $8 billion.

The program was originally expected to cost $2.6 billion and last 20 years.

“Despite unprecedented challenges over the past few years, our skilled construction crews continue to make steady progress to replace rapidly corroding iron pipes in Chicago that date back to the 1800s,” said Brendan Conway, spokesperson for Peoples and North Shore Gas. in an email.

A 2019 pipeline engineering study commissioned by Peoples Gas and the Illinois Commerce Commission found that 83% of remaining iron pipes have an average life of less than 15 years.

Conway said construction “remains on track” to be completed by the end of 2040, while the cost of the full 30-year pipeline program is still budgeted for an upwardly revised $8 billion. . However, the program could come to a screeching halt next year, depending on which direction the political winds are blowing in Springfield.

Peoples Gas spends about $300 million annually on the program, but will require lawmakers to approve extending ratepayer funding beyond 2023. The utility won legislative approval in 2013 to pass the costs on to customers for 10 years.

The Citizens Utility Board is advocating that lawmakers end the built-in pipeline replacement surcharge next year, subjecting Peoples’ spending to greater regulatory scrutiny and forcing the utility to get infrastructure improvements approved by the through traditional tariff cases.

Conway said Peoples Gas doesn’t know what will happen with the legislation in 2023, but the utility can’t leave the aging pipeline system as it is.

“The Chicago system modernization work needs to be done,” Conway said. “In terms of the mechanism used to pay for necessary work, we will join with policymakers and all stakeholders to determine exactly what that looks like.”

Longer term, Kolata would like to see pipeline replacement reduced, taking a “triage” approach to repair only what is needed as home heating shifts more widely from gas to cleaner energy alternatives such as heat pumps. electric heat, which have received a boost from recent federal climate initiatives.

The Cut Inflation Act, signed into law by President Joe Biden in August, includes $369 billion for climate and energy programs. Starting in January, homeowners will be able to claim a tax credit of up to $2,000 for the purchase and installation of an electric heat pump, which can benefit the climate and use less energy than a furnace. traditional gas.

Kolata said the state will likely pick up an energy bill in the next two or three years to accelerate the transition from gas heating to electric heating.

Rebuilding all of Chicago’s aging gas pipeline infrastructure, Kolata said, could be obsolete by the time it’s finished.

“We just create all these stranded costs, which you end up paying for something way beyond when you actually use it, which is not what we want,” Kolata said. “I think over time home heating will become electrified.”

Meanwhile, rising gas prices have placed a strain on many consumers, with about a third of Chicagoans already paying late fees on their utility bills as the coldest winter months approach. colder, Kolata said.

The Low-Income Home Energy Assistance Program can help keep struggling households heating at or below twice the federal poverty level. The senses. Dick Durbin and Tammy Duckworth announced Thursday that low-income Illinois families will be eligible for a share of $208 million in federal funding allocated to the state through the program this winter.

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