Consumer advocates are fighting a bill they say would allow for ComEd and other utility companies to sidestep the current comprehensive regulatory system, leading to automatic rate hikes.
The battle over how electric utilities are regulated is heating up in Springfield, even as state regulators consider a $326 million rate increase ComEd requested last year.
Consumer advocates say the Energy Infrastructure and Modernization Act
(HB 14), sponsored by State Rep. Kevin McCarthy (D-Orland Park), would
allow ComEd and any utility companies that agree to make similar
investments to sidestep the state's existing regulatory system and allow for
automatic rate hikes. The companies would then only be subjected to a
45-day review after the hike is implemented. According to a
preliminary analysis by the Citizens Utility Board (a group fighting the
bill), the legislation would cost consumers a minimum of $1.15 billion over
the next decade and could start as soon as this year. A similar bill pushed last year was a non-starter with lawmakers.
Currently, the 11-month review process for rate hikes is part of the regulatory system administered by the Illinois Commerce Commission (ICC) and review only happens when the utility company decides to request a rate hike (ComEd said they submitted their case for the $326 million increase in 2010, and before that, submitted a case in 2007).
This system has been in place for almost 100 years for utility companies, which economists consider natural monopolies. These rate hikes are only for the delivery costs, not the actual units of gas or electricity itself because those costs are directly passed with no mark-up onto the customer anyway.
CUB says, “State law already requires ComEd to keep its power lines in top working order, and the regulatory process is designed to guarantee that ComEd cover its costs—and make a healthy profit.”
And while the bill
does require ComEd to make these unspecified investments in the
electric grid system over the next 10 years, CUB’s David Kolata said he
questions why the the bill wants to “gut” the regulatory system by using a forumla to determine the rate increase versus the current comprehensive system, which puts the burden of proof for the need of the increase on the company. Attorney General Lisa Madigan and the AARP
are also working to defeat McCarthy's
ComEd disputes this. A spokeswoman for the utility, Alicia Zatkowski, told Progress Illinois the bill would actually ensure ComEd resubmits its numbers more frequently (each June) to get an immediate adjustment, while a longer rate review process takes place over 8.5 months (instead of 11). If the ICC finds that customers have overpaid, ComEd would then reimburse them with interest.
The reason for the bill, Zatkowski said, is that the cost of the investments -- including the $1.5 billion for Smart Grid technology ComEd has pledged over the next 10 years as part of the bill -- are “enormous” and the bill would provide some assurance for them to continue. She also said it is “apples and oranges” to discuss the bill in conjunction with their pending rate increase because the rate increase is about maintaining the current system while the bill allows for future investments.
Expect to hear more about this issue in the coming weeks. The website SmartEnergyIl.com, which is funded by ComEd, has paid for pro-HB 14 advertisements. And the bill is still alive in the House Rules Committee. Even though it didn't make it out of committee before the lower chamber's March 18 deadline, the bill's life has been extended until at least April 15 under House rules.
UPDATE: The original photo was substituted.
UPDATE (3/31): Details about SmartEnergyIl.com were corrected.