Commonwealth Edison’s request for a $199 million rate increase needs scrutiny as close as Illinois can give it.
Get out the microscope. A big one.
Back in the day, if a utility asked for too much money, the Illinois Commerce Commission could just say no. But in 2011 — the same year as the admitted start of a bribery scheme involving ComEd and “various associates of a high-level elected official in the state of Illinois” — the Legislature approved guaranteed profits for ComEd through a so-called formula rate. Former House Speaker Michael Madigan, D-Chicago, shepherded it through over then-Gov. Pat Quinn’s veto.
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That formula rate is still in place, though this is its last year. That means the ICC, which historically has overseen rate increases, doesn’t have a lot of room to maneuver with this latest one. About $114 million of the increase is locked in.
But that doesn’t mean the agency shouldn’t go over ComEd’s request with a fine-toothed comb and make trims wherever they are needed. The ICC should also make sure ComEd’s spending plans include upgrades to communities that need them the most.
The ending of formula rates gives ComEd a theoretical incentive to jam as many costs as it can into the final year of the formula rate before it returns to the more traditional rate-approving model. Ironically, if the ICC grants ComEd’s request for the full $199 million increase, it will just about equal the $200 million fine the utility agreed to pay as part of a federal deferred prosecution penalty over the bribery scheme.
ComEd says it needs the rate hike because its “grid was designed decades before wide-scale adoption of renewables, electric vehicles, digital devices, industrial electrification and emerging sectors like indoor agriculture.” But that’s pretty much what the utility has said every time it has asked for a recent rate hike.
If ComEd’s request isn’t pared down a bit, ratepayers will pay a whopping 49% more for the delivery of electricity than they did before the Legislature approved the formula rate, according to the Illinois Public Interest Research Group (PIRG). The proposed increase would add $2.20 per month to the average residential ratepayer’s bill beginning next January. The increase would be more for residents of single-family homes.
Electricity bills include charges both for buying electricity from generating companies and paying ComEd to deliver it over its wires. Because the cost of buying electricity has been relatively low in recent years, people might not have noticed how ComEd’s charge for delivering it has been creeping up.
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Under the formula rate, ComEd’s profits have been three times higher than they were before, according PIRG. ComEd has said the formula rate has allowed it to move forward with important investments without worrying that it wouldn’t be able to recoup the money it spends.
Instead, ComEd must be required to justify every dollar of every rate hike. It may be able to do so for at least part of the latest increase request because of the cost of transitioning to renewable energy, as required by the 2021 Climate Equity and Jobs Act. Dozens of organizations and various stakeholders are meeting now in so-called integrated grid planning workshops, to chart where electrical grid investments should go to keep Illinois on a path to renewable energy and equity.
Chicago is expected to soon release its Climate Action Plan update, which is expected to call for more buildings to go electric. Meanwhile, the efforts to move from fossil fuels to renewable energy sources for everything from heating to home appliances to cars means ratepayers will be using more electricity.
It’s important they can get it at a fair price.
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