State’s natural gas customers are paying more for benefit of others

By AARON DEWEESE
    In the 1999 film “Office Space,” characters concoct a scheme to defraud their company by diverting fractions of a penny into a bank account, with the logic that such a miniscule amount won’t be noticed but will pay off handsomely over time. The chicanery backfires, to the tune of hundreds of thousands of dollars aggregated in short order, and hilarity ensues.
    But here’s something you might not find so funny. Essentially the same thing is happening to Illinois’ natural gas customers, who are subsidizing gas utility expansion elsewhere in the state and paying higher rates for the benefit of others.
    And guess what? It’s totally legal, with the blessing of the Illinois Commerce Commission.
    Take a look at the “Delivery Charges” section of your monthly Nicor bill, or the “Gas Delivery” section of your monthly Ameren bill. It includes costs related to expansion, i.e., the cost to put new pipe into the ground to connect a new customer to a gas main. In both cases, it’s not broken out as a separate line item, so customers don’t know what they are paying for.
    The Illinois Propane Gas Association (IPGA) thinks this is wrong. Moreover, despite extensive research by the IPGA, the amount added to each existing customer’s gas bill to extend service to new customers is difficult, if not impossible, to fully determine and may only be known to Nicor and Ameren. This stems from the lack of reporting requirements and the variability of expansion plans and cost recovery methods. Collectively, existing Nicor and Ameren customers would pay hundreds of millions of dollars to help strangers obtain natural gas service. Nicor and Ameren would collect these dollars over several decades.
    IPGA research of publicly available ICC records also reveals that Nicor has thus far used existing customers to finance just over 90 percent of its gas main extension projects in areas previously considered too expensive to reach with natural gas, and nearly 65 percent for Ameren customers. Such financing efforts entail Nicor and Ameren offering new customers “free” service pipe, while existing customers will assume the cost of that “free” pipe in their monthly bills for decades.
    This energy policy isn’t in statutes or administrative codes; it’s the result of recent tariff revisions approved by the ICC with little public input or scrutiny. Such expansion expenses are then rolled into the company’s next rate case at the ICC. Those new construction expenses are passed on to customers while Nicor and Ameren increase revenue. The only question these utilities have is, “How fast can we put in pipe?”
    Sure, it’s legal, but IPGA believes it’s unfair to Nicor and Ameren customers, both present and future, and creates an uneven energy marketplace, providing a substantial advantage to natural gas at the expense of other energy sources – including propane, more than 90 percent of which is produced domestically.
    The solution to this increasing subsidization is Illinois General Assembly House Bill 2172, which is designed to create transparency and accountability, and limit natural gas extension subsidization by existing customers.
    Customers have a stake in this. Contacting their state representative and asking him or her to support House Bill 2172 is a great first step. Contact information for all state representatives can be found at ILGA.gov/house.
    Taking a legislative approach is a bold step, but we believe it’s the only way to protect consumers and maintain a fair energy marketplace.
    Aaron DeWeese is the executive director of the Illinois Propane Gas Association, based in Springfield.