State regulators pull plug on $1.5 billion rate hike sought by ComEd

A split decision from the Illinois Commerce Commission sends ComEd back to the drawing board for a plan that lines up with a clean energy law signed by Gov. J.B. Pritzker — and it means Chicagoans will see much smaller electric bill increases than expected in the new year.

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A ComEd truck is seen in Uptown Tuesday afternoon August 4, 2020.

On Thursday, the Illinois Commerce Commission turned down a $1.5 billion rate hike sought by ComEd.

Pat Nabong/Sun-Times

State regulators on Thursday rejected a new grid plan and $1.5 billion rate hike sought by ComEd, saying the utility’s proposal “failed to comply” with a sweeping clean energy law signed two years ago by Gov. J.B. Pritzker. 

The 4-1 decision from the Illinois Commerce Commission sends ComEd back to the drawing board for a plan that lines up with the 2021 law that aims to phase out carbon emissions — and it means Chicagoans will see much smaller electric bill increases than expected in the new year. 

ComEd’s proposed rate hike, filed in January, would’ve raised the average Chicago area residential electric bill by $6.72 next year, with subsequent yearly hikes totaling $17 by 2027. That would mark an 18% jump from today’s average $93 bill. 

ComEd said the billion-dollar hike was the cost of beefing up the electric grid for the landmark climate legislation, which also has a goal of rolling out a million electric vehicles by 2030. Additionally, the utility said it needs to better equip its system for severe weather that has become more common due to climate change. 

An administrative law judge previously suggested the commission cut ComEd’s rate hike down to $400 million, but the panel ended up tossing out their rate plan completely on Thursday, ordering the utility to come back within three months with a new plan. 

In the meantime, customers’ bills are expected to see only slight increases starting in January. The impact to the average ComEd household bill — calculated through lengthy, arcane formulas — wasn’t immediately clear, but was guaranteed to fall far below ComEd’s initial ask. 

The commission also shot down a $1.3 billion hike sought by Ameren, which powers most of Illinois outside the Chicago area. 

ICC chairman Doug Scott said the companies’ plans “represented billions of dollars that would be shouldered by ratepayers.”

“While the commission recognizes that there will be costs to achieve the state’s clean energy goals, [the Climate and Equitable Jobs Act] specifically requires the companies to ensure that their plans incorporate cost-effectiveness principles and sufficiently consider affordability,” Scott said at the commission’s Loop headquarters. 

ComEd spokesperson Shannon Breymaier said the utility still needed to review the commission’s full order, but “based on comments made from the bench, we can say at this time that we are very disappointed with the outcome as described. 

“Regardless of the language in the order, we remain committed to working with all stakeholders, including our regulators, to deliver a cleaner, more equitable, and brighter energy future for the northern Illinois communities we’re privileged to serve,” Breymaier said. 

Michael Carrigan, the downstate commission member who was the lone vote against nixing ComEd’s plan, said he still thought the utility’s proposal went against state law, but that it could have been modified “without delay in implementation.”

Consumer advocates hailed the decision as a sign of “a new era” for utility regulation in Illinois. 

“This is a reset,” said Sarah Moskowitz, executive director of the Citizens Utility Board. “We need to approach these new problems and new goals for the state in new ways.

“I’m just really glad to see that [commissioners are] taking that to heart and understand that CEJA was written to preserve affordability and make sure that the benefits of the clean energy transition go to the citizens of Illinois, and aren’t just a cash cow for the utilities,” Moskowitz said. 

ComEd, which is owned by publicly traded Exelon Corp., had asked regulators to increase its profit rate, which currently sits at about 8%, up to about 10.7% by 2027. The ICC’s order grants them an 8.9% return on equity. 

“Utilities in Illinois have been able to just not do great work in the past, and they’ve gotten away with that,” said Abe Scarr, director of the Illinois Public Interest Research Group. “The commission is holding them very tightly to the law, saying ‘this was not good enough, you’re noncompliant and you’ve got to do it over.”

The decision caps a tough year for ComEd that saw two former ComEd executives and two former consultants convicted in May of a nearly decadelong conspiracy to bribe former Illinois House Speaker Michael Madigan to benefit ComEd. 

Madigan, slated for trial next year, has pleaded not guilty. 

ComEd has said it’s implemented “comprehensive reforms” with more oversight and employee training to make sure such wrongdoing “can’t happen again.”

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