After persuading state regulators to slash requested rate hikes sought by natural gas companies in Illinois, consumer advocates and environmental justice activists are hailing a new discount rate system that’s expected to help prevent more utility shut-offs in lower-income neighborhoods across Chicago.
The Illinois Commerce Commission on Nov. 16 ordered Peoples Gas and other utilities to implement the tiered discount rate system — the second of its kind to be introduced in the nation— by October 2024, promising to expand the pool of Chicagoans eligible for help with their heating bills.
The new system was approved as part of the decision that also saw regulators cut a rate hike requested by Peoples Gas from $402 million down to about $301 million.
That’s still a record-high increase — which will tack on $6 to the average monthly household bill, as estimated by consumer watchdogs — but the revamped discount rates will deliver much more help to the people who need it most, advocates say.
“This is an absolute game-changer for people struggling with their heating bills in brutal Chicago winters,” said Karen Lusson, senior attorney for the National Consumer Law Center who argued before the commission on behalf of the nonprofit Community Organizing and Family Issues.
The new energy edict sets five tiers of discounts for households in relation to federal poverty guidelines. They range from a 5% discount for customers with a household income up to three times the federal poverty level, up to an 83% discount for those below half the level.
Any customers documenting such financial hardships will be able to see the discounts on their bills, unlike existing assistance programs that are reliant on government funding that typically dries up each year with only 20% of eligible customers getting help.
And the new discounts will apply to a customer’s entire bill, not just fixed delivery costs, as Peoples Gas pushed for in the rate case. Lusson said that was a key component in advocates’ goal of ensuring customers don’t have to spend more than 3% of their monthly income on gas bills.
“If you’ve got a $275 heating bill, but you only got a discount on the $30 customer charge, that’s just not going to make a difference,” Lusson said, calling the new system “a model for commissions across the country.” A similar discount structure took effect last year in Washington state.
In an email, a spokesman for Peoples Gas said regulators “ordered additional support for customers with lower incomes, and we plan to carry out its approach. The next steps are for us to file an implementation plan and take part in industry workshops with the Commission to address the detailed administrative mechanics of the reduced rates.”
Naomi Davis — founder of the environmental and social justice group Blacks in Green, which has championed the tiered discount rate system for years — said Peoples Gas has “a duty to serve all of the people in the service territory that you’ve been awarded.”
“You have an investor-owned utility with a monopoly franchise and a guaranteed profit rate of 9.44%. How many businesses sit on that type of luck?” Davis asked.
She pointed to Black neighborhoods on the South Side, including Englewood, where about 20% of customers in the 60621 ZIP code were sent disconnection notices in September and about half were hit with late fees, according to an analysis by the Illinois Public Interest Research Group.
For many, the new discount system will be “the difference between another month of partial pay and some oxygen,” Davis said.
“They can take a breath and stay connected to their power. These are very high-quality changes for those who are most vulnerable to disconnection. That’s what justice calls for here,” said Davis, who’s still pushing, along with the Campaign to End Energy Poverty, to see the changes codified into state law.
Illinois PIRG director Abe Scarr acknowledged the expanded discounts will be subsidized by other ratepayers, “but there are societal benefits to that.” That can include preventing customers from being disconnected and resorting to unsafe practices, like using an oven to heat a unit, he said.
“Just because we’re helping more people out at the bottom, it doesn’t mean we should take the eye off the ball. We still need regulators to be focused on keeping rates reasonable and affordable for everyone,” Scarr said.
For information on existing assistance programs, visit helpillinoisfamilies.com or call (833) 711-0374.