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December 17, 2015 01:00 AM

Chicago's gas main replacement program placed under review

Steve Daniels
Crain's Chicago Business
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    Manuel Martinez
    The state of Illinois is ordering a review of a program to replace aging cast iron gas mains under Chicago's streets with plastic pipes.

    The Illinois Commerce Commission is ordering a review of a program to replace Chicago's aging cast iron natural gas pipes with new plastic pipes, although the work will continue during that review.

    Officially, the commission has “suspended” Peoples' Gas's gas main replacement program, although in the world of utility regulation, the word “suspension” means that state regulators want the company to continue its existing program through 2016.

    The ICC rejected a Nov. 30 plan by the new management of the utility company to replace 250 miles of gas mains at a cost of $800 million over the next three years. That was the same pace and average cost per mile that Peoples had achieved over the past four years, prompting controversy over significantly higher natural gas delivery rates and cost overruns.

    Instead, the commission is launching a process that will take most if not all of 2016 to reboot the multibillion-dollar program to replace nearly 2,000 miles of aging, leak-prone gas mains below the city's streets. Some of those pipes are more than 100 years old.

    But in an email, Peoples Gas spokeswoman Jennifer Block said, "The ICC staff emphasized that the physical work to retire and replace the century-old infrastructure will continue while the commission and stakeholders review the program."

    Launched in 2011, Peoples' accelerated main replacement program, or AMRP, already has cost ratepayers hundreds of millions. Its budget has soared more than threefold in that time, raising alarms about unaffordable heating bills in a city known for its brutal winters.

    ICC Chairman Brien Sheahan emphasized that the company should not call an immediate halt, however.

    “I don't think anyone says just stopping all work is a good idea,” he said.

    Illinois Attorney General Lisa Madigan previously launched an investigation into the costs involved with the program, and the charges passed on to customers.

    Under the current action plan, ICC staff will be required to report back to commissioners by the end of May on recommendations to fix the program. A staff-run series of workshops early next year will gather ideas from a host of parties, including Chicago Mayor Rahm Emanuel's administration, Madigan, the Citizens Utility Board, Peoples and others. Then the commission will start a formal proceeding culminating in approval of a new, more cost-effective plan.

    "Peoples Gas looks forward to working with our stakeholders and participating in the recommended workshops to discuss how we can continue building on improvements already made to the accelerated main replacement program," Block wrote.

    Sheahan said he expected formal ICC action on a new pipe replacement plan by the end of 2016.

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