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UPDATE: CEJA helps secure big tax-related refunds for ComEd, Ameren customers

Update: On July 7th, the Illinois Commerce Commission (ICC) approved a schedule for hundreds of millions of dollars in tax refunds for ComEd and Ameren customers. The refunds will begin to flow back to consumers through their power bills in 2023. This is an update to the blog below, which was published earlier this year. 

ComEd customers would get $434 million and Ameren Illinois electric customers $50.8 million in refunds over the next three years as part of an Illinois Commerce Commission (ICC) process that was required by the Climate and Equitable Jobs Act (CEJA), groundbreaking energy legislation. The ICC is expected to make a final decision on the proposed refunds this summer. Read CUB’s Q&A:

Why would electric customers get refunds?
This is tied to an ongoing dispute among utilities in the state and consumer advocates like CUB and the Illinois Attorney General’s Office over how utilities should give customers a refund connected to the federal corporate tax cut that went into effect in 2018.

Back in 2017, Congress approved cutting the corporate tax rate from 35 percent to 21 percent (the Tax Cuts and Jobs Act of 2017). That left the utilities with excess money (technically called “EDIT,” for excess deferred income taxes) since under their accounting procedures the companies had already collected from customers to pay for taxes under the higher rate.

However, the utilities supported giving that money back to customers over decades–more than 39 years in the case of ComEd and 35 years for Ameren. CUB and the Attorney General’s Office argued for a more reasonable time period–a few years.

On this issue, the ICC ruled in the utilities’ favor several times, starting in 2018. The refunds–under the utilities’ preferred schedule–began in 2019.

However, in 2021, consumer advocates added a provision in CEJA that required ComEd and Ameren, Illinois’ largest electric utilities, to pass through a portion of the refunds by the end of 2025. Now, in a case before the Illinois Commerce Commission, ComEd and Ameren have agreed in principle to a timeline on how the money will be spread through the three years. It’s subject to ICC approval and we expect the order this summer.

When would consumers get the refunds?
Here’s a breakdown of the refunds over three years, beginning in January 2023.

Ameren Illinois ComEd
2023  $       7,623,000  $    65,100,000
2024  $     22,869,000  $  195,300,000
2025  $     20,328,000  $  173,600,000
TOTAL  $     50,820,000  $  434,000,000

Note: The refunds would be spread out across all 12 months of each year. For ComEd, the 2023 and 2024 amounts are minimums. The amounts could be higher in those years, depending on if the company gets a large rate hike. The amount of the refund in those years may be adjusted to help offset increases.

How would it show up on consumer bills? 
We don’t know how these refunds would be reflected on customer bills, but we will update this Q&A as soon as we do know. We are also crunching how many dollars this would mean for the average customer.

Why would only a portion of the refund go to consumers in the shorter timeframe?
In accordance with the federal tax code, the bulk of excess tax funds will still go to customers over nearly 40 years. That’s because federal tax law requires that such a refund be spread out over the course of the estimated life of the physical assets (poles, transformers and other electric utility equipment) with which those taxes are associated. The average estimated life of those assets was almost 40 years for ComEd and Ameren.

However, the CEJA provision concerned a subset of those funds not subject to the longer timeline of the federal code.  It is still a considerable sum of money, and amounts to hundreds of millions of dollars in total.

In past cases, the ICC ruled that it would treat the funds all the same, despite the fact that the long refund timeline from federal law did not apply to all the EDIT money, and the ICC had discretion to refund the rest of the EDIT balance sooner. So consumer advocates added a CEJA provision that called for an accelerated refund for the portion of funds not subject to federal tax law. CEJA requires the electric utilities, ComEd and Ameren, to refund all of that portion of EDIT by the end of 2025.

Are other utility customers getting refunds too?
Yes, but the full refunds for other utilities are being distributed over a longer period. That’s because CEJA dealt with electric utilities only. Unfortunately, gas utilities in the state are sticking with the unreasonable schedule and are giving the refunds back in tiny increments over decades to come.