#United States #Chicago #CUB #Nicor Gas #Environmental Defense Fund

Consumer Advocates Push for Reduction of Nicor Gas Rate Hike

Consumer advocacy groups are rallying against Nicor Gas's recently proposed rate hike of a staggering $308.6 million, urging state regulators to cut this figure by more than half. Organizations such as the Citizens Utility Board (CUB), Illinois PIRG, and the Environmental Defense Fund (EDF) have taken strong positions against what they term excessive profits and wasteful spending associated with executive bonuses within Nicor's proposal.

The Record Rate Hike

If approved, the requested rate hike would mark the largest increase for a gas utility in the history of Illinois, with average gas bills expected to rise by approximately 9%, or around $7.50 monthly. Critics are suggesting that much of this proposed hike—amounting to over $111 million—serves to inflate shareholder profits rather than address the legitimate operational expenses of the utility. They argue that much of this proposal fails to meet legal standards and should thus be rejected outright.

CUB Executive Director Sarah Moskowitz highlighted the burden that such excessive profit-seeking places on customers already reeling from past rate increases. "This testimony exposes Nicor's bald-faced attempt to capture exorbitant shareholder profits—an all-too-familiar theme for the utility's customers who have already suffered from exorbitant rate hikes in recent years," she stated fervently, encouraging customers to voice their dissent against the proposal.

The call for a reduction gains further momentum as the Illinois Attorney General has deemed that the proposed increases should be slashed considerably, with total proposed cuts reaching near $153 million based on the state’s chief legal officer evaluations.

Historical Context and Latest Developments

This fifth rate-hike request from Nicor since 2017 contributes to an alarming trend. Between 2017 and 2024, the utility raised delivery rates by 114%, equating to $747 million in total, all while its parent company, Southern Co., has recorded an impressive $25.2 billion in profits. Ariel Scarr, director of Illinois PIRG, emphasized the need for Nicor to abandon its current practices that perpetuate strikes against consumers, suggesting instead a shift to alternate, more sustainable energy solutions.

In light of the state’s decarbonization goals communicated to Nicor back in 2023, advocates express concern that significant systemic changes are not happening quickly enough. EDF Senior Attorney Curt Stokes remarked on the necessity for Nicor to adapt its long-term strategies to align with cleaner energy mandates, stating, "It is our hope that Nicor will take our suggestions seriously and update its plan; if not, we will ask the Commission to order them to."

Experts acting on behalf of CUB and EDF have conducted analyses of Nicor's intended investments, recommending a reduction of over $80 million from gas-pipeline spending on the grounds that the utility has yet to sufficiently consider alternatives that could mitigate the rate hikes.

Focus on Utility Management and Customer Interests

Through testimony submitted, CUB articulated several adjustments designed to cut the proposed rate hike. Suggestions include adjustments to the proposed return on equity (ROE)—from an exorbitant 10.35% to a more reasonable 9.45%—which alone could yield a reduction of $47.2 million. A critique was also raised regarding Nicor's request to increase its common equity ratio to an unsustainable 54.59%, proposing instead that it remain at 50% to provide an estimated $28.5 million cut to the proposed hike. Notably, the advocacy groups argue that executive bonuses tied to company performance should not burden customers, positioning this adjustment as another potential $18 million cut.

In a separate distressing pursuit, CUB reported that Nicor is attempting to pass off $6.7 million as “rate-case expenses,” essentially burdening consumers with the legal fees associated with its repeated rate hike proposals. Should approval be granted, it would be the fifth such instance of consumers financing their own rate hikes, totaling a staggering $26.7 million over recent years. In recognition of this issue, CUB is pushing for legislation known as the Utility Transparency Act, aimed at preventing such practices.

As the Illinois Commerce Commission gears up to rule on this contentious rate hike by November, its decisions will not only impact the financial landscape for Nicor but, more critically, the everyday lives of the 2.2 million consumers relying on this utility for gas delivery.

In the grand picture of utility regulation, watchdog efforts from organizations like CUB have historically saved consumers over $20 billion, reflecting their long-standing commitment to utility accountability. Advocates continue to stand firm against what they deem unjustified financial maneuvers, emphasizing the power of collective consumer advocacy in shaping the future of essential services.

For further details on this case and to partake in the petition against Nicor's rate hikes, visit CUBActionCenter.com.