Ameren Illinois, which has about 800,000 downstate customers, requested an increase that translates to between $8 to $10 higher monthly bills for a typical residential customer.
by Andrew AdamsCapitol News Illinois
Critiques from consumer groups
The Citizens Utility Board, a consumer watchdog group, filed written testimony this month in both cases arguing that the requests should be cut — Nicor's by about 36% and Ameren's by about 42%. Other groups, like the Illinois attorney general’s office, the Environmental Defense Fund and others argued for additional cuts in their own filings. Abe Scarr, director of the consumer advocacy group Illinois PIRG, said the companies are requesting “long-term commitments” in paying for gas system infrastructure, despite the potential for decreasing demand for fossil fuels.
For Ameren, much of the contention comes from the company’s plan to upgrade its natural gas system.
“The more expensive their infrastructure investments, the more opportunity they have to profit,” Scarr said. Because utility profits are regulated by agencies like the ICC, there is a financial incentive to invest in infrastructure so that more funds can be “recovered” from customers — a portion of which then go to shareholders. That rate of return is one of the things being litigated in these rate cases. Both companies requested a bump in their allowed “return on equity,” which translates to the amount paid to shareholders. In recent years, the ICC has consistently rejected utilities’ requests for higher return rates, although they have approved some modest increases. “You’re asking us to predict what those shares are worth next year? Next month is gonna be hard,” CUB’s general counsel Eric DeBellis said. DeBellis said the companies overstepped in other areas of their requests as well, including costs associated with rate cases and post-employment benefits as well as an accounting irregularity worth millions of dollars that Ameren has already admitted was erroneous. He noted that Nicor included tens of millions of dollars of projects that were rejected by the ICC in the company’s rate request two years ago, a move that DeBellis called “galling.”
Environmentalists question future of gas
The companies drew criticism from some environmentalists, who argued in testimony this month that investing in natural gas infrastructure as the state — and country — move away from fossil fuels could leave customers on the hook for the bill for decades. Curt Stokes, a senior attorney at the Environmental Defense Fund, said he's concerned that gas companies are building out new gas infrastructure in a way that “locks us in and keeps us hooked on fossil fuels for our energy needs.” For Ameren, much of the contention comes from the company’s plan to upgrade its natural gas system, a plan that company officials say is required by federal safety rules. But critics point out that Ameren frequently chooses to totally replace pipes — the most expensive and most profitable option — instead of cheaper alternatives like testing them for safety. But Ameren officials defend the choice as being the only option to ensure compliance with federal rules.
They certainly have not demonstrated, and there’s lots of — lots of — reasons to be skeptical, that there’s any environmental benefit.
“The investments we have proposed in our reliability plan will enable us to meet strict federal pipeline safety requirements, reduce leaks, and provide reliable and affordable natural gas service for our residential and business customers,” Brad Kloeppel, Ameren’s senior director of gas operations, said in a statement. “We evaluate all methods available for each segment of pipe subject to compliance based on cost and operational feasibility." Meanwhile, advocates have criticized Nicor’s efforts at lessening greenhouse gas emissions. The utility requested to make permanent a pilot program called “TotalGreen,” a voluntary effort that allows customers to pay to offset their carbon footprint through a mix of “renewable natural gas” and investments in methane capture and forest conservation. “They certainly have not demonstrated, and there’s lots of — lots of — reasons to be skeptical, that there’s any environmental benefit,” Scarr said. The EDF, Illinois PIRG and the Environmental Law and Policy Center argued in a joint filing that the “TotalGreen” program fails to live up to the state’s clean energy goals. Among other reasons, the groups’ testimony said it costs more than $2,400 per person and has only offset the equivalent of 0.0031% of the company’s yearly carbon footprint. Jennifer Golz, a Nicor spokesperson, said the program “supports the state’s broader environmental objectives on the path to a sustainable future.” “Nicor Gas supports our parent company, Southern Company Gas, in its goal to achieve net zero direct greenhouse gas emissions from its operations by 2050,” Golz said in an email. “We also support reducing emissions across the natural gas value chain, from gas production to transmission to end uses.” TotalGreen is one of several projects outlined in the two rate cases which use “renewable natural gas,” a term for methane that is captured from landfills, wastewater treatment plants and farms that would have otherwise been released into the atmosphere. Stokes said there were “too many open questions” about renewable natural gas programs for the EDF to support the initiatives, but he was optimistic about some of the companies’ other proposals. “There are good signs in these cases that Nicor and Ameren are looking to be more innovative,” Stokes said. He pointed specifically to Nicor’s energy efficiency programs and a proposal for a pilot program at Ameren which would allow communities to transition from natural gas to electric all at once as pipes need to be replaced or retired.
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
