Capital Program Planning for Illinois Gas Utilities

by | Oct 21, 2026

Illinois · Natural Gas Utilities

The state that paused an $8 billion pipe program is where every gas capital dollar now gets tested.

Illinois regulators halted the Peoples Gas System Modernization Program over runaway costs, retired the QIP surcharge, and set a 2035 deadline for cast-iron replacement — all while decarbonization reshapes long-horizon throughput. Each of those forces moves the projects on your list. Invizion helps gas utilities re-sequence a capital portfolio in a click — and defend every decision to the ICC.

See how Invizion helps utilities See what Illinois utilities face Download the briefing (PDF)
The bottom line: Illinois is the state where regulators actually stopped a multibillion-dollar gas capital program: with the Peoples Gas SMP paused, the QIP surcharge gone, and a 2035 cast-iron deadline set, the utilities that win here are the ones whose capital plans can be re-sequenced — and defended — on demand.
$8B+1
Projected cost of the Peoples Gas Chicago pipe-replacement program by 2015 — nearly double the $4.45B estimated in 2012.1
Jan 1, 20352
ICC deadline for Peoples Gas to replace all cast- and ductile-iron main under 36 inches — after the program was paused in November 2023.2
2,284,0003
Nicor Gas customers — the state's largest LDC, serving the northern third of Illinois outside Chicago.3
~4M4
Residential natural gas customers statewide — Illinois is one of the most gas-heated states in the country.4

The Illinois Landscape

Four forces are moving your project list at once

In Illinois, the pressures on a gas capital plan are unusually concrete: a landmark program was ordered to stop, a surcharge disappeared, a decarbonization clock is running, and every rate case is contested. The plan you filed last year may already be the wrong plan.

Integrity & Aging Pipe

A paused program and a hard 2035 clock

Peoples Gas launched its System Modernization Program in 2011 to replace roughly 2,000 miles of aging cast- and ductile-iron main beneath Chicago.21 Costs escalated from a $4.45 billion estimate in 2012 to more than $8 billion by 2015, with per-mile costs climbing from about $3 million to $4.8 million as roughly $2 billion was spent over seven years — leaving some 1,800 miles still in the ground.15

In November 2023 the ICC ordered Peoples Gas to pause SMP spending; in February 2025 it directed the utility to replace all cast- and ductile-iron pipe under 36 inches by January 1, 2035 — a mandated schedule that will drive capital sequencing for a decade.2

Decarbonization Pressure

A net-zero clock over a multi-decade pipe plan

Illinois's Climate and Equitable Jobs Act, signed in September 2021, puts the power sector on a path to net-zero carbon by 2045 and the state economy to net-zero by 2050.6 Chicago adopted an Energy Transformation building code in 2022, and advocates pressed hard for building electrification during the Peoples Gas rate case.7

For a utility committing billions to multi-decade pipe replacement, declining throughput and stranded-asset risk are no longer hypothetical — they are inputs to every long-horizon capital decision.7

Supply & Affordability

Winter peaks meet rising bills

Illinois heats predominantly with natural gas, and the residential delivered price reached about $11.25 per thousand cubic feet in 2025.8 Winter design-day peaking and commodity shocks — most recently the February 2021 Winter Storm Uri price spike — flow through to customers on top of infrastructure surcharges.

With roughly a third of Chicago households already struggling to pay gas bills, affordability has become a first-order constraint on how fast capital programs can move.7

Capital Recovery & Rates

The surcharge is gone; everything runs through rate cases

The Qualifying Infrastructure Plant (QIP) surcharge — authorized under a 2013 law to recover pipe-replacement costs between rate cases — expired in December 2023.9 Peoples Gas now recovers modernization costs through base rates, and utilities must justify infrastructure in full ICC proceedings.2

Those cases are contested: Peoples Gas sought a record $402 million increase (Docket 23-0069), while Ameren Illinois's gas business won a December 2025 order at a 9.60% ROE on a $3.2 billion rate base.79

Who Delivers Illinois's Gas

Four investor-owned LDCs carry almost all of it

Illinois gas distribution is overwhelmingly investor-owned and ICC-regulated. Four utilities — Nicor Gas, Peoples Gas, North Shore Gas, and Ameren Illinois — serve the vast majority of the state's customers; municipal gas is a small niche.

Investor-owned gas utilities

Rates & capital recovery regulated by the ICC

Nicor Gas (Southern Company Gas) 2,284,000 customers · northern Illinois · ~34,000 miles of pipe310
Peoples Gas (WEC Energy Group) ~1,000,000 customers · City of Chicago · ~4,300 miles of main211
North Shore Gas (WEC Energy Group) ~158,000 customers · northern suburbs / Lake County211
Ameren Illinois Natural gas across central & southern Illinois9
Smaller regulated LDCs A handful of small utilities (e.g. Mt. Carmel Public Utility) serve rural downstate areas

Nicor Gas alone serves more than 2.28 million customers; its parent, Southern Company Gas, planned roughly $2.0 billion of capital across its utilities in 2025.3

Municipal & public gas

Locally governed — a small share of the state

Illinois Municipal Gas Agency (IMGA) Joint-action agency providing wholesale natural gas to member municipal utilities
Municipal gas distribution systems A small number of city-run LDCs, mostly downstate
Gas cooperatives Effectively none — Illinois gas distribution is investor-owned-dominated

Unlike the electric sector, Illinois has little municipal or cooperative gas service. That concentration means the state's gas capital story is largely the story of four ICC-regulated companies.

Rate-Setting & Oversight

Every capital dollar has to be defensible

The Illinois Commerce Commission sets rates and reviews capital recovery for the state's gas LDCs — and, as Peoples Gas learned, it will pause a program it judges imprudent.

  • Illinois Commerce Commission (ICC) regulates rates, cost recovery, and infrastructure programs for Nicor Gas, Peoples Gas, North Shore Gas, and Ameren Illinois.12
  • The QIP surcharge sunset (December 2023). The Qualifying Infrastructure Plant rider, authorized in 2013 to recover pipe-replacement costs between cases, expired — shifting recovery back into base-rate proceedings.92
  • The Peoples Gas SMP pause. In November 2023 the ICC ordered the System Modernization Program halted pending an investigation; in February 2025 it set a January 1, 2035 deadline to replace cast- and ductile-iron pipe under 36 inches.2
  • Recent rate cases. Peoples Gas requested a record $402 million increase (Docket 23-0069); Peoples Gas and North Shore Gas rates reflect a 9.38% authorized ROE, and Ameren Illinois's December 2025 gas order set a 9.60% ROE on a $3.2 billion rate base.729

How The Capital Gets Recovered

In Illinois, the money comes from rates — not grants

There is little federal money flowing to Illinois's investor-owned gas systems. Modernization is funded through ratepayer-backed capital and recovered in ICC proceedings — which makes disciplined, defensible sequencing the whole game.

  • QIP surcharge — now expired (Dec 2023). The between-cases infrastructure rider that funded a decade of accelerated replacement has sunset; recovery now runs through base rates.9
  • Base-rate recovery of the SMP. Beginning December 1, 2023, Peoples Gas recovers System Modernization Program costs in base rates rather than a rider — every dollar subject to prudence review.2
  • Utility capital budgets. Southern Company Gas — Nicor's parent — planned roughly $2.0 billion of capital across its utilities in 2025, and Ameren Illinois's gas rate base stands at about $3.2 billion.39
  • Federal safety grants are limited here. PHMSA's Natural Gas Distribution Infrastructure Safety & Modernization program targets municipal and community-owned systems — not the large investor-owned LDCs that serve most of Illinois, which fund modernization through ratepayer capital.

Where Invizion Fits

Turn Illinois's gas-system decisions into a defensible capital plan

Invizion is scenario-based capital portfolio optimization built for utilities. When a replacement mandate accelerates, throughput forecasts shift, or a decarbonization ruling lands, you don't re-plan by hand for weeks — you model it and decide with a record to stand behind.

1

Model the “what-if” before it's forced on you

A faster main-replacement schedule, a gas-line-extension ban, an RNG mandate — build the scenario and see the impact on the whole portfolio, side by side with today's plan.

2

Re-sequence 500 projects in a click

When priorities move, Invizion re-orders the portfolio automatically — accelerating, stretching, or deferring projects against the constraints you set, not weeks of spreadsheet surgery.

3

Give regulators or your board a defensible record

Every prioritization and trade-off is captured. When you're asked “why this project, why now,” the answer is documented — not reconstructed after the fact.

Illinois Gas, In Brief

Questions Illinois gas utility leaders are asking

Short, sourced answers — the same facts we dig into with utilities looking at their capital programs.

What happened to the Peoples Gas pipe-replacement program?
The System Modernization Program, launched in 2011 to replace about 2,000 miles of cast- and ductile-iron main, saw its cost estimate climb from $4.45 billion (2012) to more than $8 billion (2015). In November 2023 the ICC ordered it paused over runaway costs; in February 2025 it required all cast- and ductile-iron pipe under 36 inches to be replaced by January 1, 2035.12
What was the QIP surcharge and why did it end?
The Qualifying Infrastructure Plant rider, authorized under a 2013 law, let gas utilities recover pipe-replacement investment between rate cases. It expired in December 2023, so infrastructure spending must now be recovered through full base-rate proceedings before the ICC.92
Who are Illinois's largest natural gas utilities?
Nicor Gas (Southern Company Gas) is the largest with about 2.28 million customers across northern Illinois; Peoples Gas serves roughly one million in Chicago and North Shore Gas about 158,000 in the northern suburbs (both WEC Energy Group); and Ameren Illinois serves central and southern Illinois.329
How is decarbonization affecting Illinois gas utilities?
Illinois's 2021 Climate and Equitable Jobs Act targets net-zero carbon power by 2045 and a net-zero economy by 2050, and Chicago adopted an Energy Transformation building code in 2022. That creates declining-throughput and stranded-asset risk for utilities committing billions to multi-decade pipe programs.67
What returns are Illinois gas utilities authorized to earn?
Recent ICC decisions set Peoples Gas and North Shore Gas rates at a 9.38% authorized ROE, and Ameren Illinois's December 2025 gas order set a 9.60% ROE on a roughly $3.2 billion rate base — with rate increases, such as Peoples Gas's record $402 million request, actively contested.297
How does Invizion help Illinois gas utilities plan capital?
Invizion is scenario-based capital portfolio optimization for utilities. It lets you model how a paused program, a surcharge sunset, a 2035 mandate, or a declining-throughput forecast reshuffles your whole project list, re-sequence the portfolio automatically against your constraints, and keep a defensible record of every trade-off for the ICC.

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About the Author

GB

Guy Barlow

President, Invizion

Guy Barlow leads Invizion, a capital lifecycle management platform for water and wastewater utilities. He has spent two decades at the intersection of utility capital programs, funding, and analytics, helping utilities make faster, more defensible capital decisions.

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Invizion helps utilities model, optimize, and defend their capital programs. Explore how it works, or read our latest thinking on capital planning across the utility sector.

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This briefing was last reviewed September 2026.

Sources

  1. Energy News Network / Canary Media — Illinois regulators probe cost disclosures on the Peoples Gas main-replacement program; estimate rose from $4.45B (2012) to over $8B (2015) for ~2,000 miles, 2015. canarymedia.com
  2. WEC Energy Group, Inc. — Form 10-K for fiscal year 2024 (Peoples Gas & North Shore Gas customers, SMP November 16, 2023 pause, February 20, 2025 order to replace cast/ductile iron under 36" by Jan 1, 2035, base-rate recovery from Dec 1, 2023, 9.38% ROE), filed Feb. 2025. sec.gov
  3. The Southern Company — Form 10-K for fiscal year 2024 (Nicor Gas 2,284,000 customers; Southern Company Gas ~$2.0B 2025 capital plan), filed Feb. 2025. sec.gov
  4. U.S. Energy Information Administration — Illinois natural gas number of residential/commercial/industrial consumers (~4.0M residential), 2024. eia.gov
  5. Citizens Utility Board (CUB) — Peoples Gas pipe-replacement cost and performance: per-mile cost ~$3M rising to ~$4.8M, ~$2B spent over seven years, ~1,801 miles remaining, ~$8/month residential surcharge. citizensutilityboard.org
  6. Canary Media — Illinois Climate and Equitable Jobs Act (CEJA): signed Sept. 15, 2021; net-zero carbon power by 2045, net-zero economy by 2050, renewables 40% by 2030. canarymedia.com
  7. Energy News Network / Canary Media — Peoples Gas rate case: record $402M request (Docket 23-0069), building-electrification testimony, Chicago's 2022 Energy Transformation Code, affordability, 2023. canarymedia.com
  8. U.S. Energy Information Administration — Illinois residential natural gas price (~$11.25 per thousand cubic feet), 2025. eia.gov
  9. Ameren Corporation — Form 10-K for fiscal year 2025 (Ameren Illinois natural gas rate order effective December 2025, 9.60% ROE, ~$3.2B rate base; QIP expired December 2023), filed Feb. 2026. sec.gov
  10. Nicor / Wikipedia — Nicor Gas service territory (northern third of Illinois, excluding Chicago) and ~34,000 miles of pipeline; Southern Company subsidiary. en.wikipedia.org
  11. Peoples Gas / Wikipedia — Peoples Gas ~4,300 miles of gas main and Chicago service area; North Shore Gas ~158,000 customers in Lake County; WEC Energy Group. en.wikipedia.org
  12. Illinois Commerce Commission — regulator of rates and infrastructure cost recovery for Illinois gas distribution utilities. icc.illinois.gov