Peoples Gas asks to restore $134 million of ‘paused’ pipeline replacement work, says hundreds of jobs may be lost
Peoples Gas filed an emergency motion Friday with the Illinois Commerce Commission seeking to restore $134 million of disallowed pipeline infrastructure funding for 2024 to address uncompleted projects and critical improvements.
Without the funding, there will be safety risks from leaking pipes, gaping holes in streets and sidewalks, replacement meters left “dangling” on customer residences and hundreds of jobs lost in the new year, Peoples Gas warned in the filing.
The utility is hoping to claw back more than half of the $265 million cut from its budget when the ICC issued an order last month to pause the long-running System Modernization Program to replace 2,000 miles of aging iron pipes below Chicago streets, pending an investigation.
“The company understands the Commission’s directive to pause work on SMP; however, the $265 million in work that was paused includes more than $134 million in other critical safety and reliability work outside of SMP,” Peoples Gas spokesperson David Schwartz said in a statement.
The emergency motion is asking the ICC to restore funding for several areas of work including emergency replacement of leaking pipe segments, system improvement projects, public improvement projects and the completion of ongoing pipeline replacement projects that cannot be finished by year’s end.
Nearly $47 million of the $134 million would go toward completing pipeline replacement work in progress, where open trenches and exposed pipes are scattered across Chicago neighborhoods, the utility said in the filing.
Peoples Gas has 50 projects underway in 13 neighborhoods, according to the filing. One hot spot is the Garfield Ridge neighborhood on the Southwest Side, where the pause of the pipeline replacement program would leave a significant amount of uncompleted work at year’s end, “creating eyesores and risks to public safety,” the utility said.
The “abrupt” stoppage of work Jan. 1 “would result in streets, sidewalks and yards remaining torn up for at least a year,” according to the filing.
In addition, if the $134 million in funding is not restored and the associated work is stopped, Peoples said it could result in hundreds of layoffs by January.
“We are working to minimize job losses as part of the ICC’s order to pause the work, but we know that several hundred jobs will likely be lost — mostly union construction jobs,” Schwartz said.
Launched in 2011, the System Modernization Program was plagued from the outset by delays and budget overruns. More than a decade later, the pipeline replacement program is 36% complete, and Peoples Gas says it will take until 2040 and cost about $8 billion to finish.
Peoples Gas filed for a record $402 million rate hike in January, with more than half of the increase earmarked for the pipeline program after a 10-year legislative surcharge enabling it to automatically pass the costs along to customers expires at the end of this year. On Nov. 16, the ICC issued an order pausing the pipeline program and disallowing $265 million of funding earmarked by the utility to continue the work.
Consumer advocates cheered the pause of the pipeline replacement program as a victory for more than 884,000 Peoples Gas customers in Chicago, who currently pay about $15 per month to fund it.
The requested increase would have added $11.83 per month to the average residential bill for Peoples Gas customers beginning in January. With the reduction by the ICC, the rate increase will likely be cut in half to about $6 per month for most customers, according to the Citizens Utility Board, a nonprofit Illinois watchdog group.
On Friday, several consumer groups urged the ICC to reject the emergency motion to restore $134 million in funding for the pipeline program.
“It is outrageous for Peoples Gas, which has been rolling in six straight years of record profits and just received a record rate hike, to claim that it suddenly doesn’t have the resources to conduct repairs to its system and pay its workers,” Sarah Moskowitz, CUB’s executive director, said in a statement.
The November decision by the ICC, which regulates utilities in the state, did not relieve Peoples Gas of its responsibility to identify and repair leaking pipes that may pose a danger across the city.
“Nothing in the order prohibits Peoples Gas from making prudent safety investments or appropriately concluding in-progress projects,” Abe Scarr, director of Illinois PIRG, a nonprofit consumer advocacy organization, said in a statement. “If Peoples Gas remains confused, we encourage the Commission to provide clarification without restoring any of the pipe replacement budget.”
As part of its decision, the ICC called for a new investigation into the System Modernization Program to begin by February to determine the best method and investment level to replace high-risk pipes.
The emergency motion seeks a response within three business days, with an eye toward discussion at the ICC’s regular Dec. 14 open meeting. Part of the urgency will be determining “the scope of necessary management and union employee layoffs and contractor terminations” as of Jan. 1, according to the filing.
The International Union of Operating Engineers Local 150 in Countryside has several hundred members who work for contractors on the pipeline replacement program. Ed Maher, a union spokesperson, expects significant layoffs at Peoples Gas and among contractors if the full budget cuts remain in place.
“This is going to put a thousand people out of work right around the holidays,” Maher said.
