Illinois court decision could jeopardize ComEd smart grid initiative

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An Illinois appellate court decision this week suggested that state regulators goofed big time when they allowed Commonwealth Edison to pass on specified costs to residential consumers, and the decision could have a number of far-reaching consequences — and cost ComEd and its parent company millions. The court decision sets a new precedent for how utility rates are set that includes asset depreciation, which means ComEd and the state's other utilities can't pass on those costs of "doing business," according to a Chicago Tribune news story. The decision could mean ComEd customers may get a rebate of more than $48 million (about $12 per customer). ComEd officials said the court decision will jeopardize a multi-faceted smart grid pilot project, but that the utility will try to find alternate ways to pay for it. ComEd is testing smart meters, solar panels, battery electricity storage technology, self-healing technologies and new pricing programs. The court ruled that the Illinois Commerce Commission (ICC) was wrong in 2008 when it allowed ComEd to add $5 million to all customers' power bills to pay for the pilot. The court decision took another swipe at the ICC by overturning the commission's system for setting customer utility rates. The ICC allowed ComEd to add six months to its test year in 2008, which it was allowed to do, but it didn't consider ComEd's asset depreciation during that time period. That part of the court ruling alone could cost ComEd's parent company, Exelon Corp., $77 million in annual revenue losses, in addition to a probable loss of another $85 million in its current rate increase request. A ComEd spokesman said the utility was following the regulatory rules, but that the court decision changed those rules. ComEd has until Oct. 21 to ask for a re-hearing and until Nov. 4 to appeal to the Illinois Supreme Court.

Quick Take: Interpreting court decisions like this one is tricky business, but the immediate takeaway is that utilities and regulators in other states should consider the Illinois decision a heads up.

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