Illinois attorney general pushes for rate cut as Peoples Gas seeks $202 million hike

The Illinois attorney general’s office and consumer advocates say Peoples Gas’ proposal to raise rates by $202 million would ultimately cost homeowners while lining the pockets of the utility’s shareholders and proposed a rate decrease instead.

It will be up to the Illinois Commerce Commission to rule later this year on the gas company’s request for a $202 million rate hike, which would bump gas bills by an average of $130 per year.

But the Illinois attorney general’s office suggested a $4.1 million decrease instead, listing at least $97.2 million in “unsupported and unexplained” cost increases for the company’s pipe retirement program, among other “unsubstantiated” charges.

"[Peoples Gas estimated] costs are nearly double historical costs on a dollar-per-mile basis, and the increase is not supported by the evidence provided to date," the office stated in a filing. "[The requests] require further review and appear to contain data that is contradictory, incomplete and otherwise unreliable, indicating that included cost estimates are also likely to be unreliable."

Peoples Gas said the rate hike was needed due to inflation-boosting costs and to continue its pipe retirement program, which will ensure "safety and reliability in the system."

"A significant reduction in funding level would affect how quickly the work can be done, or whether the work can be done at all," a company spokesperson said in a statement.

The proposed hike was requested just two years after the Illinois Commerce Commission granted the utility a record $306 million rate hike; it originally sought a $402 million increase.

Raoul’s office said the utility potentially “double counted” cost estimates for the program, including adding costs for design work that’s years old, multiplying the labor force on projects of “similar complexity” — sometimes by a factor of 10. Also, the utlity is asking for a $71 million contingency fund, but that fund remains without clear goals, according to Raoul's office, and it isn't covered by some of the office’s previous regulations.

The testimony comes a week after Peoples Gas and North Shore Gas reached a $125 million settlement with Raoul’s office because the state alleged some money collected between 2017 and 2023 was incurred on “ineligible” expenses. The agreement has the company cutting $130 million in capital costs and further regulates contract bids, cost changes and other reporting requirements for its pipe retirement program.

It began in February 2025 after state regulators axed its predecessor, the Accelerated Main Replacement Program, a year earlier. Costs for that project had ballooned to almost six times the original estimate while it ran behind schedule. The attorney general’s office's testimony warns of a potentially similar fate for the current program.

Peoples Gas estimates it will replace 21 of the more than 1,000 miles of pipeline left this year and 53 miles next year. Raoul’s office estimates at this rate it will be done in 2039, unless the utility can bump the average to 135 miles per year. On a quarterly investor call Tuesday, Scott Lauber, CEO of Peoples Gas' parent company, WEC Energy Group, said the utility planned to file annual rate hikes because of the ongoing work.

“It’s already so expensive to be a Peoples Gas customer,” said Citizens Utility Board counsel Eric DeBellis. “People are already hurting. … Every increase in the cost of necessities is drastic.”

DeBellis is among those with CUB, Illinois PIRG and other consumer advocates making their own case for at least a 66% cut to the Peoples Gas proposal.

Estimates from those groups say the company’s request for a better payout for investors, suggesting a 10.1% return on equity, could be reduced to 9.45% — something also reflected in the attorney general’s office’s proposal. It would still be an increase from the current 9.38%, meaning a bigger possible payout still for shareholders, but it would cut the utility’s proposed hike by $42.8 million.

WEC Energy Group reported $1.6 billion in profits in 2025 after the company saw revenue grow eightfold between 2024 and 2025. Its stockholders profited to the tune of $804.4 million in the first quarter of 2026.

Meanwhile, 140,000 Chicago households were at least 30 days behind on their gas bill in March — a total of more than $100 million in debt, according to ICC data. In response to concerns about affordability earlier this year, the company told a Chicago City Council committee it was working with the city to help residents find discounts.

The advocates’ analysis also says $14.4 million could be cut from profit incentive-based executive bonuses. ICC staff made a similar recommendation in their own filings, saying it "provides benefits to shareholders and not ratepayers."

“This company is rolling in profits, their parent company is rolling in profits,” said Jim Chilsen, CUB’s communications director. “And here we are again with them in Chicagoans' pockets.”