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 natural gas customers in Southern Illinois, 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 (ICC).
Take a look at 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. It’s not broken out as a separate line item, so you don’t know what you’re 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 Ameren. This stems from the lack of reporting requirements and the variability of expansion plans and cost recovery methods. Collectively, existing Ameren customers would pay hundreds of millions of dollars to help strangers obtain natural gas service. Ameren would collect these dollars over several decades.
IPGA research of publicly available ICC records also reveals that Ameren has thus far used existing customers to finance just over 65 percent of its gas main extension projects in areas previously considered too expensive to reach with natural gas. Such financing efforts entail Ameren offering new customers “free” service pipe, while existing customers will assume the cost of that “free” pipe in their monthly bills for decades. What some may find more offensive is the fact that Ameren extension projects to date have benefitted the owners of vacation homes in places like Lake Carroll. We will not know where, or how expensive, the next expansion project will be until Ameren files a request with the ICC, but we do know that Ameren is always looking for new customers.
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 you while Ameren increases revenue. The only question the utilities have is, “How fast can we put in pipe?”
Sure, it’s legal, but IPGA believes it’s unfair to 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 the 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 like you.
You have a stake in this. Contacting your state representative and asking him or her to support House Bill 2172 is a great first step. Contact information for your state representative 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 like you and maintain a fair energy marketplace.