Peoples Gas Defends $202M Rate Hike Before City Council Despite Record Profits

Peoples Gas officials defended a proposed $202 million rate increase before Chicago City Council members Tuesday, arguing the hike is necessary to complete mandated pipeline replacements despite consumer advocates’ fierce opposition.

The gas utility seeks to raise rates by an average of $11 per month per customer, or about $130 annually, according to testimony at the Committee on Environmental Protection and Energy. While City Hall cannot block the increase, aldermen heard arguments from both sides before the Illinois Commerce Commission makes the final decision later this year.

Maria Bocanegra, president of Peoples Gas and North Shore Gas, told committee members the increase would help complete a state mandate to replace aging pipes by 2025 and offset higher operating costs from inflation. The company is partnering with the city clerk’s office to help customers find bill discounts and working to launch a pilot geothermal energy program, according to Bocanegra.

Consumer advocates argued Chicagoans already struggle with heating costs, pointing to Illinois Commerce Commission data showing more than 145,000 Chicago households were at least 30 days behind on gas bills in January, totaling nearly $10 million in debt.

Ald. Leni Manaa-Hoppenworth (48th) criticized the company for seeking higher rates while posting record profits. Peoples Gas’ parent company, WEC Energy Group, reported $1.6 billion in profits in 2025, up from $1.5 billion the previous year, according to company filings. The utility’s revenue grew eight times to nearly $10 billion between 2024 and 2025.

The proposed increase comes two years after the Illinois Commerce Commission granted Peoples Gas a record $306 million rate hike. Last year, regulators ordered the utility to overhaul its controversial pipeline replacement program that had run years over budget and behind schedule.

The renewed pipe replacement project will resume this month in 10 Chicago neighborhoods. Originally expected to cost less than $2 billion to replace more than 2,000 miles of aging underground pipes by 2030, the program has already cost more than $3.3 billion with about half the work remaining, according to project data. The completion deadline has been pushed to 2035.

Illinois Public Interest Research Group director Abe Scarr questioned whether the company could meet the mandate, noting Peoples Gas needs to replace 100 miles of pipe annually to stay on track but historically completes only 60 miles per year, according to his organization’s report.

“This replacement first approach is too expensive,” Scarr said during the hearing. “This is more of a continuation than a break of People’s Gas’ previous efforts.”

Consumer advocates urged the company to reduce program costs by relining existing pipes, which can potentially double their lifespan, rather than full replacement. They also pushed for investments in green energy alternatives instead of gas infrastructure they argue will likely be phased out before it’s paid off.

The company maintains the pipeline replacement project is necessary for safety, citing the leak-prone nature of aging pipes throughout the system.

The Illinois Commerce Commission will make the final determination on the rate increase request. If approved, it would mark the second major rate hike for Chicago gas customers in three years, adding to affordability concerns as winter heating bills already strain household budgets across the city.

The hearing represents one of the few opportunities for Chicago officials to publicly challenge utility rate decisions, even though the city lacks authority to block increases approved by state regulators.