For Release: 02/05/2008
New Delivery Rates Approved for Peoples Gas and North Shore Gas
First Delivery Charge Increase in 12 Years
CHICAGO, IL – Peoples Gas and North Shore Gas today received a final decision from the Illinois Commerce Commission (ICC) in their first request in more than 12 years for an increase in the amount the two utilities charge to deliver natural gas, the company said.
Peoples Gas received an increase in its base rates of $71 million as estimated by the ICC. The new delivery rates will mean that the typical residential heating customer in Chicago will see a modest increase of about $7 per month. Based on the return on equity approved in the rate case, the delivery rates for North Shore Gas customers would actually remain about the same. The new rates will be reflected on customers' bills beginning mid-February.
The delivery charge makes up about 20 percent of a customer’s bill. The other parts of the bill are the actual cost of natural gas itself (about 70%), which is passed on at cost to customers, and state and local taxes (about 10%).
"After 12 years of no delivery charge increases, we believe these rate changes are reasonable and will allow the companies to meet their obligation of delivering safe and reliable energy to one-million customers," said Desiree Rogers, President of Peoples Gas and North Shore Gas.
Rogers said the companies will use the new rate structure to continue enhancing natural gas delivery safety, reliability and customer service in the following ways:
- Replace cast iron mains with newer materials that will ultimately cause less disruption to neighborhoods during maintenance and repair work;
- Complete our automated meter reading program to eliminate estimated bills;
- Continue to make it easier and more convenient for customers to set up accounts and pay bills both on-line and over the phone;
- Implement energy efficiency programs to help reduce energy usage while protecting the environment;
- Automate and track programs to meet all safety requirements set by federal and state regulators; and
- Attract and retain highly skilled employees to serve customers every day.
The new rate structure includes several tools that help to ensure the health of the company while meeting the needs of customers.
One such mechanism is the Volume Balancing Adjustment (VBA), also known as 'decoupling.' It breaks the link between utility earnings and customers' energy consumption providing the revenues necessary to run the companies' 6,000 mile natural gas delivery system. In other words, this tool will allow for the fixed costs of the utility to be covered regardless of the weather.
Decoupling does not shelter the utility from the impact of increased costs or guarantee the company's profits. In most cases, the program would provide a credit to customers in months that are colder than normal while allowing allocating a charge when weather is warmer than normal. Overall, customers pay no more and no less than what the utility is authorized to recover by state regulators. Additionally, by conserving energy, customers would reduce the largest portion of their bill, the cost of gas itself. Gas costs are about 70% of customers' bills.
The Commission also approved funding for Enhanced Efficiency Programs (EEP) that would encourage energy efficiency and conservation. The programs will be administered by a governing board that is to include government, consumer advocacy groups and the company.
"We have worked over the past 12 years to hold down costs while investing approximately one billion dollars in our natural gas delivery system and utilizing technology to improve service to customers," said Rogers. "Like all businesses, our costs have risen over the last 13 years, but we have avoided a rate increase by holding down expenses. Now those measures alone are not enough to maintain the level of service that customers expect," Rogers said.
Peoples Gas and North Shore Gas, subsidiaries of Integrys Energy Group (NYSE: TEG) are the natural gas delivery companies for Chicago and 54 communities in Northeastern Illinois, serving the energy needs of nearly one million residential, business and industrial customers.
About Integrys Energy Group, Inc.
Integrys Energy Group, Inc. (NYSE: TEG), headquartered in Chicago, Illinois, is a holding company for energy related subsidiaries, which includes regulated utilities and nonregulated subsidiaries.
The six regulated utilities consist of:
- The Peoples Gas Light and Coke Company, a natural gas utility serving approximately 830,000 customers in the City of Chicago.
- Wisconsin Public Service Corporation, an electric and natural gas utility serving approximately 433,000 electric customers and 314,000 natural gas customers in northeastern Wisconsin and an adjacent portion of Michigan's Upper Peninsula.
- Minnesota Energy Resources Corporation, a natural gas utility serving approximately 207,000 customers throughout Minnesota.
- Michigan Gas Utilities Corporation, a natural gas utility serving approximately 165,000 customers in lower Michigan.
- North Shore Gas Company, a natural gas utility serving approximately 158,000 customers in the northern suburbs of Chicago.
- Upper Peninsula Power Company, an electric utility serving approximately 52,000 customers in Michigan's Upper Peninsula.
The company's principal nonregulated subsidiary is:
- Integrys Energy Services, Inc., a diversified nonregulated energy supply and services company serving residential, commercial, industrial, and wholesale customers in developed competitive markets in the United States and Canada.
- Integrys Business Support, LLC is a service provider of innovative and cost-effective support services and solutions to Integrys Energy Group affiliates, focused on customers, service delivery, cost management, and value creation.
More information about Integrys Energy Group, Inc. is available online at www.integrysgroup.com.
For More Information, Contact:
- Bonnie Johnson (Media)
Manager, Public Relations
312-240-4567
312-907-7333 (Cell)