Wednesday, February 13, 2013

Utilities look to lawmakers
to settle regulation dispute

By Jamey Dunn 

Utility customers across Illinois could see a spike in their bills if a measure that a Senate committee approved today becomes law.

Senate Bill 9 would essentially override a ruling from the Illinois Commerce Commission because lawmakers say that the commission misunderstood some of the details in the smart grid legislation, which became law in 2011 when the legislature overrode Gov. Pat Quinn's veto. “It was felt by many in the General Assembly that we had a clear piece of legislation, and yet the ICC misinterpreted it,” said Senate President John Cullerton, who sponsored the bill. “It’s just reenacting the bill that we intended to enact in the first place.” The ICC ruling could cost Commonwealth Edison an estimated $100 million annually, and Ameren was ordered to reduce its rates by just under $50 million. The utilities want the money back, plus interest. And they say that they would have to downsize their plans to invest in the state’s power infrastructure without it. “We find ourselves at a point where we need some clarification in order to continue on,” said Anne Pramaggiore, chief operating officer of ComEd.

Ameren and ComEd are committed to investing more than $3 billion in the grid over 10 years as part of the smart grid plan. Under the law, ComEd is required to create 2,000 new jobs, and Ameren is required to create 450 jobs over the same time period. Pramaggiore said that ComEd has already created 700 new jobs under the plan. The utility has also installed 500 “smart switches” that help to prevent power outages and completed 500 projects to strengthen the grid against storm damage. But she says the money that the ICC denied the utility would hurt its efforts to upgrade the power system. “Without it, we are stalled in these programs. We can’t proceed forward and continue on and ramp them up as we intended.”

Richard Mark, president and chief executive officer of Ameren, agreed. He said that Ameren has reduced its capital spending by $30 million and has put off hiring 100 additional workers.

‘‘In this instance, the commission went forward with some decisions that apparently were not what the General Assembly intended for that language to say. And today they are taking action to begin to correct that and to make modifications to get that implementation down to what they had originally intended,” said ICC Executive Director Jonathan Feipel. He said the ICC’s role is to interpret the law as it is sent to the commission. “The commission in deciding these cases went through literally thousands and thousands of pages of evidence and legal briefs, and interpreting very complex statute is what the commission does. So these commission orders were then absolutely based on record evidence and legal briefs and the state of the law at the time.”

Proponents of SB 9 say it will allow the utilities to make upgrades, which are intended to create savings for customers in the long run. But opponents say those savings are an unknown, and the immediate result would be higher bills with no real benefits for customers.

“The people on the line to pick up the cost of this drafting error is the Illinois consumers. What were looking at is both a retroactive rate increase... and it applies interest, as well,” said David Vinkler, associate state director for AARP Illinois. He said that if the bill is approved, the cost to consumers may not be that great, but he said it adds up when considered along with other rising utility costs, especially for seniors on fixed incomes. “It may not end up being a whole lot per bill. You may be talking $2 to $5 per bill. The problem is that there are people that $2 to $5 is too much. You’ve got this sort of death by a thousand cuts.” Vinkler said that the Ameren and ComEd’s appeal to lawmakers undermines the regulatory role of the ICC. “We have a Commerce Commission for a reason. They’re doing their job. [Ameren and ComEd] keep on running back the to General Assembly because it’s a better venue for them.”

For more on smart grid, see Illinois Issues July/August 2011.

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