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REGULATORY ENVIRONMENT | 3 Months Ended
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Mar. 31, 2023
Regulated Operations [Abstract] |
REGULATORY ENVIRONMENT | REGULATORY ENVIRONMENT The Peoples Gas Light and Coke Company and North Shore Gas Company 2023 Rate Case On January 6, 2023, PGL and NSG filed requests with the ICC to increase their natural gas rates. They are requesting incremental rate increases of $194.7 million (13.0%) and $18.7 million (7.8%), respectively. The requested rate increases are primarily driven by capital investments made to strengthen the safety and reliability of each utility’s natural gas distribution system. PGL is also seeking to recover costs incurred to upgrade its natural gas storage field and operations facilities and to continue improving customer service. Both companies are requesting an ROE of 9.90% and a common equity component average of 54.0%. PGL is not seeking an extension of the QIP rider. Instead, PGL will return to the traditional rate making process to recover the costs of necessary infrastructure improvements. See the Qualifying Infrastructure Plant Rider section below for more information on the QIP rider. An ICC decision is anticipated in the fourth quarter of 2023, with any rate adjustments expected to be effective January 1, 2024. Qualifying Infrastructure Plant Rider In July 2013, Illinois Public Act 98-0057, The Natural Gas Consumer, Safety & Reliability Act, became law. This law provides natural gas utilities with a cost recovery mechanism that allows collection, through a surcharge on customer bills, of prudently incurred costs to upgrade Illinois natural gas infrastructure. In January 2014, the ICC approved a QIP rider for PGL, which is in effect through 2023. PGL will not seek an extension of the rider beyond 2023. PGL's QIP rider is subject to an annual reconciliation whereby costs are reviewed for accuracy and prudency. In March 2023, PGL filed its 2022 reconciliation with the ICC, which, along with the reconciliations from 2016 through 2021, are still pending. As of March 31, 2023, there can be no assurance that all costs incurred under PGL's QIP rider during the open reconciliation years, which include 2016 through 2022, will be deemed recoverable by the ICC. Minnesota Energy Resources Corporation 2023 Rate Case In November 2022, MERC initiated a rate proceeding with the MPUC to increase its retail natural gas base rates by $40.3 million (9.9%). MERC's request reflected a 10.3% ROE and a common equity component average of 53.0%. The proposed retail natural gas rate increase is primarily driven by increased capital investments as well as inflationary pressure on operating costs. In December 2022, the MPUC approved MERC's request for interim rates totaling $37.0 million, subject to refund. The interim rates went into effect on January 1, 2023. In April 2023, MERC reached a settlement with certain intervenors. The settlement reflects a natural gas base rate increase of $28.8 million (7.1%), along with a 9.65% ROE and a common equity component average of 53.0%. Under the agreed upon settlement, MERC will continue the use of its decoupling mechanism for residential customers, and it will be expanded to include certain small commercial and industrial customers. The settlement is pending MPUC approval, and we expect a decision in the fourth quarter of 2023. Michigan Gas Utilities Corporation 2023 Rate Case On March 3, 2023, MGU filed a request with the MPSC to increase its retail natural gas base rates by $19.1 million (9.1%). MGU's request reflects a 10.4% ROE and a common equity component average of 51.4%. The proposed natural gas rate increase is primarily driven by capital investments made to strengthen the safety and reliability of MGU's natural gas distribution system and to provide service to additional customers. Inflationary pressure on operating costs also contributed to the proposed rate increase. As part of MGU's rate application, it also requested changes to its Main Replacement Program rider. The changes include updates for projects that are expected to be placed in service during 2023 and 2024 and included in MGU's base rates, updates to remaining project costs to address inflation, and an extension of the rider for an additional two years (new expiration of 2029). An MPSC decision is anticipated in the fourth quarter of 2023, with any rate adjustments expected to be effective January 1, 2024.

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