Rate Hikes for Chicago Electric Utility Vetoed by Governor Quinn

Thursday September 29, 2011
Posted at 08:08
Tags: comed

Illinois Gov. Pat Quinn vetoed controversial legislation Monday that would have allowed Commonwealth Edison Co. (ComEd), the state’s largest electric utility, to raise utility rates.

Quinn followed through on a promise to veto the rate hikes when the state budget plan that contained them was approved by the Illinois state House in May. The legislation gave ComEd permission to increase electric rates by a guaranteed minimum of 2.5 percent each year for the next two years to offset a planned $1.5 billion modernization of its power grid, which included the installation of “smart meters” in all homes and businesses in the utility’s service territory.

The bill’s chief sponsor, House Rep. Kevin McCarthy, D-Orland Park, said in May that the rate increases would create at least 2,000 new jobs while bringing “cutting edge technology” and “outstanding reliability” to ComEd’s aging power grid.

Quinn blasted the so-called “ComEd bill” when it was approved in May and again when he vetoed it Monday, arguing that consumers would get the short end of the stick because the bill determined only minimum rate increases, not maximums. “[The legislation] may be a dream come true for Commonwealth Edison, but it's a nightmare for Illinois consumers,” Quinn said Monday.

Critics: Rate Hike Bill Gives Public Utilities a ‘Blank Check’

Opponents of the legislation — including Attorney General Lisa Madigan, AARP Illinois and the Citizens Utility Board — criticized it for the way it profoundly altered the determination of electric rates, how often rate increases occurred and how much profit ComEd would be allowed to take. In May, Madigan called the legislation a “blank check” for ComEd. Other critics referred to the legislation as a “Trojan horse” that the utility planned on using to increase its bottom line by eliminating the authority of the Illinois Commerce Commission (ICC), the state’s utility regulator, to oversee electricity rate increases.

ICC proposed a compromise that borrowed from ComEd’s bill and from a series of workshops with utilities, government officials and consumer advocates that resulted in an Oct. 2010 report that was meant to guide utilities as they moved forward with requests for smart grid technology. Instead, according to ICC chairman Doug Scott, the utilities chose to fight for legislation that would provide a way to pay for the smart grid without clearly defining how much consumers would pay and what they would pay for.

Although the ICC proposal never made it to the floor, Scott said that it could be revived for the upcoming veto session.

Electric Utility Could Pressure House to Overturn Veto

As it stands, the embattled ComEd bill will be sent back to the House in an attempt to gain enough votes to override Quinn’s veto. The House approved the bill by a vote of 67-47 in May. To override the veto, the measure would need to receive 71 votes.

Quinn’s veto comes just days after ICC announced it had launched an inquiry into a series of summer storms that led to massive and lengthy outages, including a July 11 storm that left more than 800,000 ComEd customers without power.

Robert Gallo, Illinois’ state director for AARP, said that ComEd’s smart grid initiatives wouldn’t guarantee improved service, decreased outages or faster repairs. "We've called the smart grid a wolf in sheep's clothing all along," Gallo said. "You won't have to call ComEd but it doesn't guarantee they'll have someone fix it."

Riding a wave of negative publicity, ComEd ranked in the bottom three of 17 utilities in the Midwest in a J.D. Power and Associate’s survey.

Consumer advocates and opponents of the ComEd bill, including the Citizens Utility Board, AARP, the Environmental Law and Policy Center, Citizen Action Illinois and Madigan, said they would continue to fight to make sure Quinn’s veto stands.

Sources

Quinn Vetoes ComEd Rate Hike,” Chicago Tribune, Sept. 12, 2011.

House OKs ComEd Hikes, but Quinn Veto Possible,” Chicago Sun-Times, May 31, 2011.

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