The Peoples Gas Light and Coke Co. and North Shore Gas Co., both Integrys Energy Group Inc. utilities, are seeking rate hikes from the Illinois Commerce Commission to take effect next year, in part to cover bad debt expense for gas commodity charges.

Currently Peoples and North Shore have authorized returns on equity of 10.19% and 9.99%, respectively, and a 56% equity ratio for both companies. New rates, if approved, would go into effect in 2010. Peoples would see a revenue increase of about $162.9 million, or about 10%. North Shore would see a revenue increase of nearly $22 million, or about 6%. Each would have a return on equity of 12%.

Both the Peoples and North Shore filings are based on a 2010 forward-looking test year and include riders for the gas cost component of bad debt expense. In addition, the Peoples proposal includes a rider for the accelerated replacement of its cast iron main system. The companies are seeking recovery of the increasing costs of maintaining an aging infrastructure and also proposing to accelerate infrastructure replacement. They are also seeking recovery of other cost increases, such as employee and retiree health care and pension benefits.

One year ago both utilities were granted permission to institute decoupling mechanisms to allow for the recovery of fixed costs through nonvolumetric charges. The approval was granted despite the objection of Illinois’ attorney general, who said customers would be billed for the delivery of gas they do not use (see Daily GPI, Feb. 7, 2008).

The rate case process in Illinois requires receipt of a written order from the Illinois Commerce Commission within 11 months from the date of filing, which would be in January 2010.

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