Smart grid or smart grab?
Consumer advocates blast ComEd rate increases
The state’s largest electric utility is asking lawmakers for a series of automatic rate increases to upgrade infrastructure, but consumer advocates say it’s an unfair deal.
Commonwealth Edison, which delivers electricity to about 70 percent of the state’s population, is pushing legislation that would allow them to skip the ICC’s approval for automatic yearly rate increases – in exchange for building a modern electricity “smart grid” that the utility says will save consumers money in the long run.
Among other things, smart grids allow consumers to schedule certain appliances to operate when demand is lower, thereby taking advantage of lower electricity costs. ComEd says a smart grid would pave the way for more “green” energy sources, lower household energy consumption and improve response to power outages. The company also touts the creation of 2,000 jobs at the project’s peak.
House Bill 14, sponsored by Democrat Rep. Kevin McCarthy of Orland Park, requires “participating utilities” – those that voluntarily implement smart grid technology – to invest $1.1 billion over five years to upgrade their systems and provide training, as well as $1.5 billion over 10 years to upgrade transmission lines and install smart meters in homes.
Though the bill provides for automatic rate increases, the actual increase amount would be set by the Illinois Commerce Commission, based on a utility’s expenses in a given year. The increase would include a premium for the utility’s investors, calculated by adding 625 “basis points” (6.25 percent) to the annual yield of a United States Treasury bond. Those bonds have yielded about 0.17 percent interest over the past year.
The Citizens Utility Board (CUB), which advocates on behalf of utility customers, opposes the bill in its current form, saying the proposal would cost Illinois consumers at least $1.15 billion over the next decade. CUB says it’s unclear whether ComEd’s proposal would build a true smart grid, so they want the project halted until results come in from a pilot project already under way.
Beginning in October 2009, the state-approved Advanced Metering Infrastructure (AMI) project put “smart meters” that instantly report power usage in 120,000 homes in and around Chicago. Alicia Zatkowski, a ComEd spokesperson, says preliminary analysis of that program done by the Electric Power Research Institute shows encouraging results. The research group analyzed a subset of customers in the pilot program and found in the first three months, five to seven percent of customers lowered their electricity bill between 32 and 37 percent, Zatkowski says.
ComEd has created a modified version of HB14 to address consumer advocates’ concerns, though the language of that revision has not been made public. However, ComEd did release a statement saying the revised proposal would require ICC approval for rate increases and would limit investor returns, among other concessions.
The bill awaits a vote in the Illinois House and, if passed, would likely take three days to pass the Senate. The deadline for substantive bills to pass both chambers is May 27, though legislative leaders have been known to extend deadlines for major bills. The current legislative session is scheduled to adjourn on May 31.
ComEd and its parent company, Excelon Generation, have given more than $1 million in campaign contributions to individual legislators over the past five years. McCarthy has received more than $18,000 in campaign contributions from the two companies in the past four years.
On May 24, ComEd received a $156 million rate increase from ICC to pay for normal operating costs, far below the company’s original request for $396 million. Illinois Attorney General Lisa Madigan, CUB and other consumer advocates opposed the rate increase, saying customers instead deserve a $40 million rate cut. CUB says it will appeal the ruling.
Contact Patrick Yeagle at email@example.com.