Why your Chicago heating bill could be a backbreaker this winter

CHICAGO - With winter approaching, Chicagoans wondering how tough the weather will be are getting one clear warning: Their personal finances are liable to get a case of frostbite.

The big concern is sharply higher costs for natural gas, used to heat the overwhelming majority of homes in the area. Nicor, the utility serving most suburbs and Northern Illinois, estimated its average residential customer will pay almost $450 more for natural gas supplies in the coming winter, or $971, almost double the cost of a year ago.

Peoples Gas said it has yet to develop an estimate, but the utility serving Chicago acknowledged bills will jump sharply. The Citizens Utility Board, a watchdog group, said this winter’s prices will be the highest since the season of 2008-09.

Some residents, though, already report substantial increases in bills due under Peoples’ budget payment plans.

John McKernin, a retired trade-show worker on the Northwest Side, said his monthly gas bill rose from about $140 to about $450 and appears to be headed higher, although he’s not sure how much. He said he got a bill for about $980 due this month after he thought he had settled an overdue balance with Peoples with a lump-sum payment.

"Whatever is going on with this, it’s a big chunk of money. Anyone would have trouble accepting this," he said. McKernin said he has spoken with the gas company but gotten little satisfaction.

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South Side resident William King, also on a Peoples budget plan, said his monthly payment on two units shot up to about $250 from around $54 several weeks ago. "I can’t afford an increase like that. We know they’re making money. They’re just misusing the consumer," said King, a retired investigator for the U.S. Department of Labor.

King said he’s fallen about $1,000 behind in payments to Peoples and is "trying to work something out" with the utility but hasn’t been threatened with a shutoff.

Peoples spokesman David Schwartz said McKernin’s account is fully paid and the company is advising King on a balance of less than $200. He emphasized that the utility has been working to keep bills low but that it must pass along to consumers higher prices that prevail for natural gas.

With prices rising rapidly, Schwartz said, "We fully realize some customers will need help managing and paying their bills. That help is available. We encourage anyone with concerns to contact us right away so we can assist them in accessing all available assistance."

By law, public utilities cannot mark up for consumers the price paid for energy, whether it’s natural gas or electricity.

Consumer advocates and the utilities quarrel about some reasons for higher bills, but they agree that programs exist for customers in financial need. Among them is an income-based subsidy under LIHEAP, the Low Income Home Energy Assistance Program. Customers also can have monthly bills set at a fixed sum, avoiding seasonal spikes. Information is available at helpillinoisfamilies.com.

In monthly reports filed with the Illinois Commerce Commission, the gas utilities have documented their rising costs. They show that natural gas rates have doubled in some cases since the start of the year and are much higher than a year ago.

Peoples, for example, said it is paying $1.07 per therm, a 48 percent increase since October 2021. For Nicor, the increase was 97%, to $1.24 per therm.

North Shore Gas, which serves some northern suburbs, reported an increase of 28%, to 86.18 cents per therm.

The pass-through charge typically accounts for a large chunk of a residential customer’s bill. At Nicor, spokesperson Jennifer Golz said it now represents 80% of the total.

The rest covers taxes and regulated charges for utilities to maintain service lines and make a profit.

Industry analysts said consumers are being squeezed for several reasons. They said severe weather in 2021, including a freeze in Texas and Hurricane Ida in the Gulf of Mexico, shut down production just as economies were revving up from the pandemic. Those events forced prices higher, as did increased exports to Europe and Russia’s invasion of Ukraine. Also, lower prices in recent years cut the incentive to explore for gas while fears of a global recession are still making producers cautious.

"It’s a perfect storm of bad news," said Jim Chilsen, CUB’s communications director.

Utility customers are catching one break, however. While electric bills are lower during cold weather because no one runs air conditioning, ComEd customers continue to get a credit on their accounts each month.

CUB said the credit, listed on bills as "Carbon-Free Energy Resource Adjustment," is about $18 per month for the average customer. The credit is part of a state law that supports aging nuclear power plants in Illinois. When energy prices are lower, consumers pay an extra fee to support the plants as a carbon-free energy resource. But when prices spike, the charge converts to a credit—in this case, 4.1 cents per kilowatt hour.

Scott Vogt, vice president of strategy and energy policy for ComEd, said the utility is now passing along a power supply charge of 8.4 cents per kilowatt hour, so the credit pays almost half that. Last year, with no credit, ComEd customers paid 6.4 cents per kilowatt hour, Vogt said.

Natural gas, used to generate electricity, is the main reason ComEd’s energy costs are higher, he said.