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Nicor Gas Files Rate Request

Nicor Gas filed a request with the Illinois Commerce Commission on Friday, March 10, 2017, to increase rates for natural gas delivery service.  If approved by the ICC, this would be the first general rate increase for Nicor Gas since 2009.

The request will allow Nicor Gas to continue to meet its commitment of providing safe and reliable natural gas service to its 2.2 million customers throughout the 650 communities in the state of Illinois. This rate increase will allow the company to address higher compliance and operating costs, including employee expenses, and allow the company to continue its system modernization and safety programs.  

On a total bill basis, a typical residential customer will experience an average increase of 8.3 percent in their 2018 annual natural gas bill compared to current rates or an increase of about $4.79 per month. 

No costs associated with the recent purchase of Nicor Gas by Southern Company will be charged to our customers.

We realize the impact any rate increase can have on our customers, and we do not make this request lightly.  Even with this proposed rate increase, Nicor Gas would remain one of the lowest cost providers of natural gas to residential customers in Illinois.

Summary of Nicor Gas Rate Case

  • Nicor Gas has filed its first general rate case in over nine (9) years—the last rate increase was approved in 2009.
  • Nicor Gas is seeking an increase in revenues to: 
    • Fund its utility operations;
    • Continue meeting growing safety and compliance requirements; and
    • Continue its system modernization program.  
  • The total request for additional rate base revenues is approximately $208 million.  
    • Nicor Gas is always concerned with the impact of any rate increase on its customers.  
    • The impact of the request is mitigated by reducing the cost of bad debt collected through rates.
    • The request has up to 11 months to evaluate the filing, and if approved by the ICC as filed, the cost to a typical residential customer would be $4.79 per month, or about 8.3 percent in his or her 2018 annual natural gas bill.
    • It’s important to note that even with this proposed rate increase, Nicor Gas would remain one of the lowest cost providers of natural gas to residential customers in Illinois. 
  • Approximately one-half of the request is attributable to adding the costs of the company’s Investing in Illinois system modernization program  to the rate base, pursuant to state law, and reducing the monthly surcharge currently paid by customers for investments beginning 2015 through 2017.
  • Since the 2009 rate case, Nicor Gas has been through two corporate acquisitions --the acquisition of Nicor Inc. by AGL Resources, and most recently the acquisition of AGL Resources, now Southern Company Gas, by Southern Company.
    • No costs associated with the acquisition of Nicor Gas by either AGLR or Southern Company is included in this rate request.
    • No costs associated with integrating Nicor Gas into Southern Company or Southern Company Gas is included in the current rate request.
  • This request will allow Nicor Gas to continue to provide clean, safe, reliable, affordable natural gas to its customers and address higher compliance and operating costs, including employee expenses.

Nicor Gas 2017 General Rate Case Priorities

  • Nicor Gas continues to focus on delivering service in a cost-effective manner, but must prepare for, and respond to, a variety of challenges and opportunities that now shape our strategic business objectives.
  • The following are examples of the challenges we face:
    • A changing operating environment involving new compliance-related regulations that will require extensive capital investment; 
    • Meeting customer expectations for more data and making access easier through applications and other technologies; 
    • Developing a “next generation” workforce that is trained to replace an aging employee base; 
    • Expanding employee and vendor diversity; and 
    • Fostering growth, which supports economic development in the State of Illinois.
  • Nicor Gas has not sought an increase in almost nine years, and since that time has invested in several infrastructure modernization projects to better serve the energy needs of its 2.2 million customers in more than 650 communities throughout Northern Illinois.

Investing in Illinois - replacement of aging main and capital investment 

  • Under the Investing in Illinois program, from December 10, 2014 to December 31, 2015, the company invested approximately $250.4 million for the following:
  • Installed 93 miles of new main to replace cast iron pipe and 12,680 related services; 
  • Installed 52 miles of non-cast iron pipe and 4,886 related services; 
  • Replaced 14,588 copper services; 
  • Replaced 4.3 miles of high-pressure transmission pipeline; 
  • Modified 8.9 miles of pipeline as part of the Storage Field Gathering Line Program; 
  • Replaced 21 wellheads and 13 associated with natural gas conditioning facilities; and 
  • Replaced 24 vaults and tin whistles.
  • The Commission found the aforementioned investments to be prudently incurred and reasonable in cost. 
  • All of this investment is in addition to Nicor Gas’ traditional level of capital investment to improve safety and reliability.  

Advanced Metering Infrastructure (“AMI”)

  • The AMI investment will provide Nicor Gas with more accurate data regarding customer consumption habits, which will allow the company to better address system reliability and increase safety through remote shut off mechanisms.  
  • Additionally, the AMI program will reduce the number of work-related injuries that may result from attempting to access and read natural gas meters.