Energy provider Commonwealth Edison Co., an Illinois public utility, is pressing for legislation that would replace the state’s complicated regulatory process for deciding electricity and natural gas rate increases with one that would allow automatic rate increases according to a formula.
Such a change would streamline the regulatory process and help to quickly and predictably recoup investments made to modernize the state’s electrical grid, according to ComEd.
The current regulatory process requires that utilities wait 11 months to decide rate cases. ComEd said that it will ask the state legislature to set rates according to a formula, like the one the Federal Energy Regulatory Commission uses to determine how to pay for transmission lines.
ComEd said that using such a formula would allow a utility to file annual rate adjustments which could then be reviewed by the Illinois Commerce Commission, the state agency that oversees public utilities, in order to ensure that residential and business customers are adequately protected from unreasonable rate increases.
In a similar proposal made last year, ComEd asked for a four-year rate freeze and an automatic 10.3 percent profit margin that would be exempt from state regulators in exchange for offering Illinois $500-million to help offset the state’s budget shortfall. However, without the inclusion or support of the state’s other utilities, the proposal failed to gain traction with lawmakers.
David Kolata, executive director of Citizens Utility Board, a consumer advocacy group, blasted the utility’s new proposal.
“Given the amount of investment [smart grid technology] requires, we understand that changes may be needed. But this can’t be a way for [ComEd] to get automatic rate increases every year and that’s that,” Kolata said.
According to Kolata, any legislation that adjusts regulation needs to require that utilities show they are meeting smart grid goals, such as energy efficiency and a reduction in peak demand.
“We’re open to discussions around changes to the regulatory system,” Kolata said. “But to the extent that the bill looks like last year’s bill, that’s not a good deal for consumers.”
“ComEd to Renew Push for Automatic Rate Hikes,” Chicago Breaking Business, Jan. 14, 2011.