Nicor Gas agrees to lower proposed rate increase by $140 million
Nicor Gas has reached a settlement with Illinois Attorney General Kwame Raoul’s office to reduce its pending rate request for next year by nearly $140 million, or 63%.
The agreement, announced Wednesday, cuts Nicor’s proposed rate increase from $221 million down to about $82 million, pending approval by the Illinois Commerce Commission.
“Our settlement ensures Nicor can continue to retain good jobs in Illinois while protecting consumers from drastic rate increases,” Raoul said in a news release.
Nicor Gas filed a $221 million rate increase request in January seeking to replace and repair aging pipelines and equipment. The rate increase would have raised average residential customer delivery charges by about $6 per month beginning in 2027, the utility said.
If approved by the ICC, the downwardly revised $82 million rate increase proposal would add $2.21 per month to the average residential bill next year, the utility said.
“We believe this settlement, if approved by the ICC, is a constructive outcome, reflecting meaningful collaboration and a shared commitment to balancing the needs of customers with the company’s obligation to continue providing safe, reliable natural gas service,” Nicor said in a statement.
Nicor, which is owned by Atlanta-based Southern Co., is the largest gas utility in Illinois, serving 2.3 million customers in suburban Chicago and northern Illinois.
The initial $221 million rate increase request sought to fund a variety of infrastructure projects, including the replacement of old equipment and 45 miles of distribution pipeline. In addition, Nicor was looking to repair more than 400 miles of transmission pipeline, the utility said.
The attorney general’s office opposed the increase, alleging Nicor overstated its forecast capital spending program and inflated an accounting mechanism to bolster profits.
As part of the settlement, Nicor has agreed to a reduction in the profit it is allowed to make on its infrastructure investments. Separately, the utility also agreed to protect union jobs through 2027.
While PIRG was among a number of consumer groups that signed onto the downwardly revised rate agreement with Nicor, it had misgivings about the supplemental agreement between the attorney general’s office and the utility to preserve union jobs next year.
Abe Scarr, director of Illinois PIRG, said the supplemental agreement reinforces a utility narrative going forward that it will cut jobs if the state doesn’t approve its proposed rate increases.
“The secondary stipulation is highly problematic in that it commits Nicor to excessive spending,” Scarr told the Tribune.
The ICC is expected to rule on the reduced rate increase proposal by November.
Last year, the ICC slashed Nicor’s previous proposed rate increase by nearly 47% to $168 million. That nonetheless raised the average delivery cost for residential customers by $3.30 per month this year.
rchannick@chicagotribune.com