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Illinois Customers to Pocket $1M From Decoupling, Utilities Say

Although it was challenged by the Illinois attorney general, a revenue decoupling plan instituted by Peoples Gas and North Shore Gas appears to be paying off for consumers, at least for now.

Peoples and North Shore customers will receive an overall net credit of $1 million on May bills from recently instituted decoupling programs, the sibling utilities said this week. Earlier this year the Illinois Commerce Commission (ICC) granted rate increases for Peoples and North Shore and allowed them to institute decoupling (see Daily GPI, Feb. 7). However, Illinois Attorney General Lisa Madigan had urged the ICC to reject the "controversial proposal...that would impose surcharges on customers for the delivery of gas they do not use." Madigan claimed that the utilities "would earn extra profits especially when customers use less gas."

Illinois lawmakers are considering a bill that would overturn decoupling for Peoples and bar its implementation in the future. Meanwhile, Illinois utility Nicor Gas is seeking decoupling as part of a rate hike that would raise about $140 million annually from business and residential customers (see Daily GPI, April 22). The Citizens Utility Board has come out against the Nicor rate hike and has vowed to fight it.

Across the nation residential gas consumption has been in decline for a number of reasons, including improved appliance efficiency and increased conservation efforts by consumers in response to higher commodity prices. Utilities have responded by seeking to reduce the amount of fixed costs they recover through volumetric charges (see Daily GPI, March 27, 2007; June 14, 2006) through the use of decoupling mechanisms. The National Association of Regulatory Utility Commissioners supports states' ability to use decoupling (see Daily GPI, April 24, 2007). The Energy Information Administration has predicted that the use of decoupling mechanisms will grow (see Daily GPI, Aug. 16, 2007).

Shown on customer bills as a "volume balancing adjustment," most Peoples and North Shore customers will see a credit on May bills. The adjustment can be either a credit or a charge, depending on the amount of gas consumed by customers. The May adjustment is based on gas usage from March 2008. March was colder than normal and revenues collected were higher than what the utilities are expected to recover. Therefore, most customers will see a credit on their May bills.

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