Illinois regulators have slashed Nicor Gas’s proposed rate increase by 63 percent, approving a settlement that cuts the company’s original $220.8 million request down to $81.6 million, commonly rounded to $82 million.
The Illinois Commerce Commission voted to adopt the deal on October 15, closing out a rate case that drew sharp criticism from consumer advocates over the utility’s profit targets and fixed charges.
What the settlement changes
The agreement announced on Thursday reduces Nicor’s initial $221 million requested increase by roughly 63%. The ICC said the consumer impact will vary based on service class and energy usage .
The commission also approved a 9.48% return on equity for Nicor, down from the 10.35% requested by the utility .
For residential customers, the most visible change is to the flat monthly fee charged regardless of usage. The decision reduces residential customers’ monthly fixed charge from $21.30 to $15.00.
Illinois PIRG Director Abe Scarr said “a settlement is a compromise, so we’re not thrilled about every element, but we are pleased the Commission approved it,” and added that “we are excited that the settlement sets a lower, $15, monthly fixed charge. Lower fixed charges reward energy efficiency and conservation and give customers more control over their bill,” according to CBS News Chicago.
The proposed $220.8 million Nicor rate hike will be cut by $139 million, or 63 percent, to $81.6 million, with Nicor’s original rate hike meaning an increase of roughly $6 a month, while with the settlement, the increase would be about $2.21 a month, on average , according to the Citizens Utility Board.
The customer charge, currently $21.30, will be cut by about 30 percent, to $15 a month, beginning Nov. 16.
Who negotiated the deal
The settlement was negotiated by Illinois Attorney General Kwame Raoul and approved by the Illinois Commerce Commission (ICC) on behalf of ratepayers, reaching agreement among the case’s parties before going to the commission for a vote.
ICC Chairman Doug Scott addressed the commission’s approach to a separate side deal on union labor, stating that the commission “retains the authority to make rate-making determinations regarding the prudence, justness, and reasonableness of any future expenditures and resulting rates.”
As part of the deal, Nicor agreed to drop a pending legal challenge tied to its prior rate case. Nicor agreed to dismiss an appeal of the commission’s 2025 rate case decision as part of the agreement , which had cut $146.5 million from Nicor’s rate request, reducing the company’s initial $314.3 million request by nearly 47 percent .
Not every element of the settlement pleased consumer groups. The consumer and environmental advocates who were party to the primary settlement declined to be party to the secondary labor deal negotiated by the attorney general’s office, which committed Nicor to maintaining this year’s union staffing levels through the end of 2027 and continuing its capital investment levels .
Scott added that “the commission’s role with respect to workforce commitments and who performs work is limited to determining whether any expense is reasonable.”
Why the case matters beyond Illinois
Nicor delivers natural gas to 2.3 million customers across northern Illinois , making the case one of the larger gas rate proceedings decided this fall.
The outcome lands amid a broader national wave of utility rate filings, as companies across the country seek recovery for grid upgrades, pipeline replacement and rising operating costs.
That trend has pushed total utility rate requests to record levels this year, a pattern GCN has tracked in coverage of filings nationally in the second quarter.
The fixed-charge debate in the Nicor case also echoes fights playing out elsewhere, including scrutiny over how much residential customers should subsidize infrastructure costs compared to other rate classes.
A similar issue was raised in a recent filing over how Maryland regulators weighed a rate hike from another utility.
Consumer advocates in Illinois describe the Nicor result as a “partial win for customers,” in that it still raises rates, building on other past rate hikes from the utility, and allows a higher profit rate than they hoped to see , even as the settlement reduced the company’s original request by nearly two-thirds, signaling that regulators are increasingly willing to cut requested profit margins and flat fees when utilities cannot fully justify them.
