State Regulators Once Again Flex Muscle in Rejecting Utilities' Grid Plans, Lessening Rate Hikes

Illinois Commerce Commission Chair Doug Scott (third from left) is pictured at a packed meeting in Chicago on Thursday as he reads a decision that will limit spending by two major electric utilities. The agency rejected grid plans from Commonwealth Edison and Ameren Illinois. (Capitol News Illinois photo by Andrew Adams)

By ANDREW ADAMS 

Capitol News Illinois
aadams@capitolnewsillinois.com

CHICAGO – The Illinois Commerce Commission on Thursday curtailed proposed rate hikes and rejected grid plans from two major electric utilities, mirroring a series of bombshell decisions rendered last month that cut increases for Illinois’ four largest gas utilities.   

The ICC rejected the pair of plans from Commonwealth Edison and Ameren Illinois that were meant to illustrate how the companies would comply with the state’s landmark climate legislation, the Climate and Equitable Jobs Act.

Those plans would have laid out how the utilities plan to integrate with new renewable energy resources and meet decarbonization requirements while ensuring electric rates remain affordable for low-income communities.

In rejecting the plans, regulators limited the companies’ proposed rate increases, meaning that next year’s impending increases will be significantly smaller than the utilities’ requests. 

ICC Chair Doug Scott said the plans had “significant shortcomings” and failed to meet the minimum standards set out by CEJA, including by failing to adequately address how the plans would benefit low-income communities. He also said the planning process lacked transparency among other criticisms.

The companies now have three months to file updated plans, which will begin a new review process at the ICC. 

Read more: Advocates hail regulatory ‘earthquake’ as state slashes requested gas rate increases

Consumer and environmental advocates praised the ICC’s decisions, saying they represent a continued, overdue shift toward tighter utility oversight. 

“This is not business as usual,” said Brad Klein, an attorney for the Environmental Law and Policy Center who argued in both cases. “This is really a very significant change in Illinois.”

Klein also said the commission “sent a strong message” to utilities and other stakeholders that they would all be held accountable to the goals laid out in CEJA. 

Other advocacy groups, such as Illinois PIRG, the Union of Concerned Scientists and AARP Illinois, also commended the decisions. 

Sarah Moskowitz, head of the consumer advocacy group Citizens Utility Board, said she is “quite pleased” with Thursday’s outcome. 

CUB focused much of its arguments against the two cases on lowering the utilities’ proposed return on equity, or profit rate. 

While both companies requested a 10.5 percent return, the ICC approved an 8.905 percent return for ComEd and an 8.72 percent return for Ameren.

While pleased, Moskowitz noted she was also surprised by the ICC’s recent decision making. 

“I’ve never seen this kind of action from the commission before,” Moskowitz said.

While the profit rates for the two companies are now set, pending any potential appeals, key factors for rate-setting remain subject to change, based on the companies’ replacement grid plans.  

“Billions of dollars continue to be on the line,” Moskowitz said. 

Commissioner and former Illinois AFL-CIO President Michael Carrigan dissented in the decision – a rarity for the agency that mostly rules unanimously. 

In a written dissent, Carrigan said while he did not believe the plans were compliant with the state’s climate law, he thought that the commission could have modified, rather than rejected, the plans to bring them into compliance.

“Based on comments made from the bench, we can say at this time that we are very disappointed with the outcome as described,” a ComEd spokesperson said in a statement released after the ICC announced its decision but before it issued its final order.

Ameren’s Matthew Tomc, the head of the company’s regulatory affairs, was also “disappointed” by the decision and pushed back against the ICC’s characterization of the company’s grid plan. 

“Ameren Illinois' plan was the result of a transparent two-year regulatory process with significant input from stakeholders, including the ICC's own expert staff,” he said in a statement. “It meets the statutory requirements of the state's Climate and Equitable Jobs Act.” 

Tomc went on to say that Ameren’s now-rejected plan advanced the state’s clean energy goals. 

Representatives from both companies said they will review the full decision. 

Peoples Gas’ failed request 

In addition to the electric cases, the commission also revisited a gas rate case brought by Chicago’s Peoples Gas on Thursday. 

Earlier this month, the company requested clarification to part of the ICC’s November decision limiting their rate increase and placing a controversial infrastructure program on hold pending an ICC investigation. 

The company claimed the decision hampered their ability to conduct emergency repairs and requested the ICC increase the record rate increase it granted last month. 

But the commission rejected this request, instead finding it was procedurally improper and that the company has an “enduring responsibility” outlined in law to maintain system safety, according to the commission's ruling. 

Read more: Chicago utility pushes back against state oversight, asks for further rate increase

The company is “likely” to request a formal rehearing in the case, according to Peoples Gas spokesman David Schwartz. 

The now-rejected request was met with strong interest from Chicago-area unions and other groups. Illinois AFL-CIO President Tim Drea, a group of Chicago city council members, as well as representatives of several area businesses, sent letters to the commissioners sharing concerns about the proceeding. 

Scott admonished the tactic on Thursday and said these types of letters “frustrate the efforts of commissioners and commission staff to perform our duties.” Instead, Scott said, concerned groups should offer public comment online or in meetings. 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.