Spiking natural gas prices to hit home for Peoples Gas customers

Yahoo

02-04-2025

When Peoples Gas was awarded a record $303 million rate hike in November 2023, the utility said the increase in delivery charges would be offset by projected lower gas prices, limiting the impact on its 894,000 Chicago customers.
But a recent spike in gas prices may deliver a one-two punch to customers this spring, bringing home the longer-term impact of the rate increase that the utility downplayed when the gas costs were lower.
Peoples Gas is charging customers 52.79 cents per therm for gas in April, up about 30% from March and 104% year-over-year, according to the Citizens Utility Board, making it the second-highest gas price Peoples has charged during April in a decade.
'Peoples Gas misled its customers,' CUB Executive Director Sarah Moskowitz said in a news release Wednesday. 'It was absurd for the utility to claim that its rate hike wouldn't lead to higher bills. The supply price spike took effect on April Fools' Day, but this is no joke for so many Chicago families who are struggling to afford their heating bills. We hope it's a warm spring.'
Residential gas bills include both supply and distribution charges. While the utilities don't make any money on the supply end — the natural gas itself — they are responsible for procuring it as efficiently as possible, to hold down the cost paid by customers.
Gas prices have been rising this year after the U.S. endured the coldest January in 37 years, increasing demand and draining underground storage supplies, according to analysts. Last month, the U.S. Energy Information Administration projected that higher consumption and lower inventories will lead to higher natural gas prices through 2026.
'The cost of natural gas is determined by global supply and demand, and the world's demand for natural gas is at an all-time high,' Peoples Gas spokesperson David Schwartz said in an email Wednesday. 'In fact the regional electric grid that serves Chicago is adding increasing amounts of gas to generate their power. These regional and global issues are increasing the cost of natural gas for customers around the world.'
After two years of relative price stability, Peoples Gas' supply prices have increased from 31.73 cents per therm in December to 52.79 cents per therm this month. The last major spike in natural gas was during the pandemic, when the price for Peoples Gas customers peaked at $1.25 per therm in July 2022.
In 2022, Peoples Gas residential customers paid an average of $131.50 per month. Last year, the average residential bill was $104.57 per month, despite the $303 million delivery rate increase — which took effect in 2024 — adding about $3.42 per month to the typical bill, according to the utility.
With the delivery rate increase built in, spiking gas prices will likely raise the average residential bill in 2025, but Peoples Gas didn't provide a projected monthly cost.
Many Peoples Gas customers can ill afford higher bills amid what CUB says is a 'heating affordability crisis.' In February, nearly 150,000 Chicago households were more than 30 days delinquent on their Peoples Gas bills, representing more than $74.5 million in debt, according to data filed by the utility to the Illinois Commerce Commission and provided by CUB.
That same month, the ICC dealt Peoples a setback, ordering the utility to speed up and complete its long-running, multibillion-dollar pipeline replacement program by 2035, but denying a more comprehensive $7.2 billion proposal to modernize its entire system.
In addition to Peoples, other gas companies in the Chicago area are passing along similar supply price increases in April, according to data supplied by CUB.
North Shore Gas, the sister company to Peoples Gas which serves 165,000 customers in the northern suburbs, is charging 56 cents per therm for gas this month, a 58% year-over-year increase.
Nicor Gas, which is owned by Atlanta-based Southern Co. and serves 2.3 million customers in suburban Chicago and across northern Illinois, is charging 58 cents per therm in April, up 71% over the same month last year.
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