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Quick take: What a disappointment for ComEd and its many supporters. With help from many, it managed to overturn a governor's veto to get very specific legislation authorizing adequate returns for a multi-billion-dollar grid modernization effort. And then, after the project was already underway, the state's Commerce Commission stepped in to nullify some of the legislation's provisions. – Jesse Berst

Commonweatth Edison said it will go to court to fight an Illinois Commerce Commission (ICC) ruling this week that would reduce the utility's cost recovery under a new formula that was part of the Energy Infrastructure Modernization Act (EIMA) that became law last year.

The legislation authorized a 10-year, $2.6 billion ComEd investment program the utility said would drive value to customers through a stronger electric system with fewer outages, faster restoration and new digital smart technologies that provide customers with more information, a greater ability to control their electric bill and new ways to save money.

As David O'Brien wrote in an op-ed piece for SGN earlier this week on the smart grid regulatory cloud hanging over Chicago, there have been a lot of politics swirling around this matter since well before the EIMA was enacted:

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"The legislation was not without the kind of drama all too common in the political realm. The EIMA bill never enjoyed the support of the Governor, the Attorney General, the Chair of the Illinois Commerce Commission or the AARP. Throughout the process, all of them made their opposition known. In fact, the bill became law only after surviving a gubernatorial veto last fall.

O'Brien, a former Vermont regulator now with BRIDGE Energy Group, noted that opponents came up with novel interpretations of what the legislation intended. A ComEd statement suggested the Illinois Commerce Commission ruling was "inconsistent" with the legislation on two of three issues up for rehearing this week. (You can read the full ComEd press release on page 2, followed by a statement from the ICC.)

“With this ruling, we have no choice but to delay some elements of the grid modernization rollout, at least until we have an outcome in the courts,” said Anne Pramaggiore, ComEd president and CEO in a press release. “The adverse rulings on the interest rate and rate base issues significantly impair ComEd’s ability to finance long-term investment programs.”

ComEd said the impact of the ruling will be to defer smart meter installations to 2015, postpone creation of 2,000 jobs and $2.3 billion in customer savings.

The Chicago Tribune article notes that ComEd isn't the only affected party. A number of companies large and small signed on to the project. The report gave as an example a Chicago-based firm, MZI Group Inc. that hired new workers and invested $560,000 to purchase trucks and equipment after receiving a five-year contract from ComEd.

"I put my whole company in jeopardy for something that I thought was done,” Arthur Zayas Miller, MZI president and chief executive, told the Tribune. “How does this happen after it’s law?”

More on this issue…

Ratemaking landmark: Illinois approves new way to set electric rates  

Steal this idea! Illinois takes steps to become a major smart grid hub  

ComEd smart grid deal: profits tied to performance