The Illinois Commerce Commission (ICC) on Dec. 14 issued a series of orders that significantly reduced the record rate hikes Commonwealth Edison and Ameren Illinois wanted while also rejecting their plans to upgrade the power grid, ruling that they violated several provisions of the Climate and Equitable Jobs Act (CEJA).
The electric rulings struck the same pro-consumer theme as the ICC did last month, when it issued a series of rulings that rebuffed major gas utilities. In the latest ruling, the ICC clearly reined in ComEd and Ameren and held them accountable for making electricity service more affordable as the state works toward a carbon-free power grid by 2045. “If the Illinois Commerce Commission keeps sticking up for ratepayers and Illinois’ climate goals, everyone will benefit,”the Chicago Sun-Times wrote in an editorial.
Here’s a Q&A on what the recent ICC rulings mean for consumers.
What does this ruling have to do with the Climate and Equitable Jobs Act?
Everything. The Climate and Equitable Jobs Act, or CEJA, is groundbreaking energy legislation passed by Illinois in 2021 that calls for Illinois to transition to 100 percent carbon-free electricity by 2045. Under CEJA, the utilities are required to present to the ICC adequate plans for readying the power grid for that transition, as well as four-year rate plans to pay for those upgrades. One of the reasons CUB supported CEJA is because it works to find the quickest and cheapest way to 100 percent clean energy.
The plans the Commission rejected last week were the electric utilities’ response to CEJA’s requirement, but luckily for Illinoisans, CEJA doesn’t just require these plans but also dictates that they are cost-effective, maintain affordability, and meet other consumer- and climate-friendly standards. The Commission found that neither ComEd nor Ameren’s plans did this, so the plans were rejected.
“The Commission’s decisions today protect Illinois ratepayers and the goals CEJA created. Illinois’ utilities are specifically required to consider affordability and cost-effectiveness so that customers are not unfairly asked to shoulder undue costs tied to the state’s energy transition,” said ICC Chairman Doug Scott. “While we are not yet at the finish line, compliant plans from the state’s largest utilities will help lead us to an energy transition that works for all Illinoisans.”
Why does the power grid need upgrading?
Similar to your home needing energy efficiency improvements to help you save money in the long run, ComEd and Ameren need to upgrade their distribution system to meet CEJA’s goals, which include 100 percent clean power by 2045, 1 million electric vehicles on Illinois roads, and historic increases in wind and solar power. But CEJA requires those upgrades to be beneficial and affordable for consumers.
What exactly did the ICC rule on?
In separate 4-1 votes, Chairman Scott and Commissioners Anne McCabe, Conrad Reddick and Stacey Paradis turned back ComEd and Ameren on several issues:
- The ICC told both ComEd and Ameren to go back to the drawing board on their multi-year power grid plans, because they failed to comply with several provisions of CEJA. Those provisions include requiring the utilities to be transparent and gather adequate public input on their plans; failing to adequately prove that the plans were cost-effective and affordable for consumers; and failing to prove how their plans would benefit consumers who have been most abused by high power bills and pollution. “Specifically, the Commission’s decisions found that both utilities failed to sufficiently incorporate customer affordability into their proposals and their grid plans did not outline how 40 percent of plan benefits will be directed to low-income and environmental justice communities, among other shortcomings,” the ICC said in a news release.
- ComEd and Ameren asked for four-year rate hikes totaling a record $1.9 billion, but the ICC slashed those by about $1.4 billion, or 70 percent.
- As part of its ruling, the ICC slashed the companies’ proposed profit rate for shareholders (Return on Equity, or ROE).
- ComEd had wanted to increase its shareholder profit rate from 7.85 percent to an obscene 10.5 percent, then rising to 10.65 percent at the end of the four-year rate plans. The ICC instead gave the company an ROE of 8.905 percent.
- Ameren pushed to increase its ROE from 7.85 percent to 10.5 percent. The ICC instead granted the company 8.72 percent.
Note: The ROE that the ICC approved was close to–and even a bit lower than–what CUB recommended (9.4 percent). CUB has had an ongoing battle with the utilities as they use their rate-hike requests to push for exorbitant profit rates for their shareholders. The watchdog believes the ROE for utilities should be much lower. In fact, in the past legislative session, we pushed for a bill that would have capped the profit rate of electric, gas and water utilities at 8 percent. We’ll keep fighting this battle.
The utilities did get rate hikes, right?
The electric utilities are still getting rate hikes, and CUB never likes to see utility bills go up, but the companies got much less than what they wanted. CUB’s legal team has reviewed the final orders and crunched the numbers:
|What it wanted:
|What rate hike was approved:
|$1.47 billion over 4 years
|$506 million (65 percent lower than what ComEd wanted)
|$448 million over 4 years.
|$56.3 million (87 percent lower than what Ameren wanted)
Note: Because the ICC rejected the utilities’ grid plans and required them to come back with new proposals, it remains to be determined whether regulators will approve portions of the proposed rate hike directly tied to grid infrastructure work. Other parts of the rate hike that don’t depend on the grid plan, like the utilities’ push for excessive shareholder profit rates, were clearly rejected. But issues specific to the grid plans are up in the air, and regulators could approve higher or lower rates in the future, depending on the ICC review of the new proposals submitted by Ameren and ComEd.
How will these increases impact my electric bills?
Read CUB’s breakdown of the impact on electric bills. These increases took effect Jan. 1, 2024 and impact delivery rates for more than 5 million electric customers (4 million ComEd customers across northern Illinois, and about 1.2 million Ameren customers in central and southern Illinois).
What is CUB’s reaction to the rulings?
In CUB’s statement, Executive Director Sarah Moskowitz called it “an unprecedented ruling in favor of electric customers.”
The Illinois Commerce Commission (ICC) today reined in reckless spending by ComEd and Ameren, said no to excessive profit rates and lowered the electric utilities’ rate-hike requests by hundreds of millions of dollars. After a decade in which electric utilities exploited lax oversight, scandal, and rampant rate hikes to reap excessive profits, the ICC made it clear that ComEd and Ameren must be held accountable to their customers and provide more affordable electric service. Today’s ICC ruling delivered an important message: Utilities need to prove that their grid plans will actually benefit consumers. Clean energy is about lowering costs for electric customers in the long run, not giving a blank check to Ameren and ComEd.
CUB General Counsel Eric DeBellis added that the ICC rulings were a rebuke of the utilities that correctly emphasized an important point about CEJA:
CEJA requires electric utilities to justify their spending as the most cost-effective way to ensure safe and reliable service and enable the transition to clean energy. The current plans by the utilities failed to prove this. The ICC’s rebuke makes it clear: CEJA requires the utilities to be intentional in how they invest ratepayer money. Clean energy is about investing intentionally to reduce long-term costs for electric customers.
The ICC ordered the utilities to come back with new grid plans, giving them three months to correct the deficiencies regulators identified. CUB’s legal and policy teams will continue to fight for consumer interests when the utilities present new plans.
In an editorial (Commonwealth Edison did not deserve the record-shattering delivery rate hike they wanted), the Chicago Tribune wondered whether ComEd will resort to lawsuits or lobbying the General Assembly to dodge the ICC’s ruling, as the utility giant has done before. Or, the Tribune wrote, will “ComEd get the message and adjust?”
“The gravy train is at an end,” the Tribune wrote. “The days of massive rate hikes, helping to finance yearly dividend increases of 5 percent or more for investors, are over. The public wants a cleaner power grid, and it wants reliable service. The utility must provide that at a reasonable cost.”
Update: ComEd has filed a “petition for rehearing,” asking state regulators to reconsider their Dec. 14 rulings. We’re expecting Ameren to do the same. We’ll fight any attempt by the utilities to reverse these rulings.