Wary ICC hopes to avoid 2nd debacle
SPRINGFIELD – For the second time this year, a corporation with a major Illinois presence is asking the General Assembly to exert its influence on the independent body responsible for utility regulation in the state.
Exelon Corp., the parent company of Commonwealth Edison, recently revealed plans to push a fast-track bill through the General Assembly in the six-day veto session that starts Nov. 4.
The legislation would give the Illinois Commerce Commission six months to review the proposed sale of Illinois Power to Exelon and to make a decision on what retail power rates will be for the four-year period beginning Jan. 1, 2007.
Review of the sale would usually take about a year, and the commission would not normally begin reviewing the request for a rate hike until early 2006.
The ICC has not taken a position on the bill, said its spokeswoman, Beth Bosch.
Illinois Power and ComEd are pushing hard, but lawmakers may be more wary of interfering with the commerce commission after special legislation they passed last spring at the behest of telecommunications giant SBC-Ameritech was later overturned by a federal judge.
In a single week last spring, SBC and an army of its lobbyists introduced a bill, pushed it through the General Assembly and obtained the governor's signature, winning a nearly 100 percent increase in the rates it is allowed to charge competitors for the use of its lines.
SBC is required by law to lease its lines to rival companies, but it is supposed to be the ICC that sets those rates, not the governor and the General Assembly.
Exelon officials emphasized that unlike the SBC bill, their legislation would only tell the ICC to speed up its review process, not tell the commission how to rule.
And ComEd spokesman Tim Lindberg said both companies (ComEd and IP) would eventually apply for the rate hike anyway.
But Martin Cohen, executive director of the Citizens Utility Board, said the bill is not as innocent as it may sound.
"ComEd knows that in 2006 there is very little chance it will be able to prove the need for a rate increase," Cohen said.
"So they're taking a page out of SBC's playbook and pushing the Legislature to do an end run around the regulatory process."
The Citizens Utility Board, a nonprofit, statewide utility watchdog, is strongly opposed to the Exelon bill.
While the legislation as proposed would not order the ICC to approve the rate increase, it would change the timing and some of the rules by which the ICC must make its decision.
According to the draft ComEd released Wednesday, the bill would waive the requirements of three provisions of the Illinois Administrative Code requiring the companies to show the commission certain documents and financial projections in a rate review case.
That would leave the commission less information on which to base its rate decision than is normally provided.
But Stacy O'Brien, an attorney for Exelon and ComEd, said the provisions in those portions of the Administrative Code anticipate a situation where rates are set for the immediate future, not as far in advance as the companies she represents are seeking.
"It doesn't anticipate a situation where rates are set for a future period and are set to be stable and predictable for a number of years," she said.
In lieu of those provisions of the code, however, the companies will provide certain information to the commission, O'Brien said.
"We have to offer sufficient proof to the ICC," O'Brien said. "We intend to provide information which in many cases is very similar to the information in the administrative code, but additionally will provide extra information that better addresses the fact that we are setting rates for a future period and rates that will be set for a number of years.
"We are still putting our case together, but we intend to go into the commission with a case that demonstrates that we meet the statute for setting rates and we expect that they will ask us questions and that there will be interaction and exchange throughout the proceeding," she said.
But Cohen said it is impossible to tell anyway at this point what a fair rate should be so far in advance, and that's exactly what ComEd wants.
"If the company wants a rate increase, it can seek one under the current law, but it would have to justify that, and that is what ComEd is trying to avoid," he said.
The proposed legislation would also eliminate wording in current law that requires rates to be "just and reasonable," and instead states that the new rates just need to promote "rate certainty," Cohen said.
He also questioned the link between the rate hike and the deal to purchase Illinois power, which he said should be considered separately.
"Why consumers should pay higher rates so ComEd can buy Illinois Power has yet to be explained," he said.
"Unlike the natural gas industry, there's a glut of electricity in our region and we're in a period of declining costs. Locking in higher rates today – rates that consumers will pay through 2010 – benefits no one but ComEd."
Exelon is in exclusive talks to purchase Illinois Power, and ComEd President Frank Clark and Illinois Power President Larry Altenbaumer said approval of the legislation by the end of the November veto session is critical to the proposed merger and will help provide stability for Illinois Power workers and customers.
Clark said he hopes to win ICC approval for a "single digit" rate hike for all of the customers in the combined service areas of Illinois Power and ComEd. That would mean higher power bills for 85 percent of Illinoisans.
State Rep. David Leitch, R-Peoria, indicated this week that he may request an anti-trust investigation if the deal goes through.
Earl Struck, president and CEO of the Association of Illinois Electric Cooperatives, said his organization is not taking a position on Exelon's proposed legislation, but will be watching the situation closely.
The first public hearing on the proposed legislation is 10 a.m. Tuesday in Springfield.
It has not yet been formally filed in the General Assembly, and so has not been assigned a bill number.
You can reach Kate Clements at (217) 782-2486 or via e-mail at email@example.com.