ComEd delivery rates to be cut this year, but rise soon after
BY SANDRA GUY Business Reporteremail@example.com May 29, 2012 12:50PM
Updated: July 3, 2012 12:29PM
Commonwealth Edison’s electric-delivery rates will drop by $168.6 million from June 1 through December as a result of an Illinois Commerce Commission decision on Tuesday.
ComEd itself had proposed a decrease of $40 million to $50 million, based on a rate-setting formula it uses that looks at the equity the utility earns on a pension plan.
The ICC reviewed ComEd’s request and decided to cut customers’ rates by four times the initial request and even more than a state regulatory’s judge’s recommended $146 million decrease. The decision appeared to rest on whether ComEd should earn a rate of return on a pension plan that is not fully funded.
Neither ComEd nor the ICC could immediately estimate how much the average ComEd customer’s monthly rates would be reduced.
After Jan. 1, rates will start to gradually go up. ComEd has estimated its $2.6 billion, 10-year grid update will cost customers an extra $3 a month on average.
A spokesman for consumer watchdog Citizens Utility Board said customers deserved the far larger decrease than ComEd had requested.
“Part of doing the smart-grid right is making sure consumers don’t pay inflated rates, and this is a step in the right direction,” said CUB spokesman Jim Chilsen. “But this is just a first step. CUB’s focus is working to minimize future ComEd rate hikes and pushing the utility to improve the power grid in a way that cuts future electric bills and improves reliability.”
Also Tuesday, the ICC unanimously approved a new and controversial rate-setting structure that critics believe will give ComEd a free hand to hike rates, but which ComEd says is needed for it to upgrade its aging electric grid and provide customers with smart meters and other technology that will help them save money.
The decision makes official a state law approved last fall that replaces a procedure in which ComEd was required to ask the ICC for a rate hike and wait about 11 months for the process to play out. The new setup enables ComEd to set electricity rates based on a formula under which ComEd has said it will hire construction workers, expand the distribution of smart meters and reduce outage frequency. Critics say it will guarantee rate hikes for the next 10 years.
Downstate utility Ameren Illinois wasn’t so lucky. The ICC rejected its plan to use smart-grid technology in its service area. The commissioners said Ameren failed to show how the technology would benefit customers and proposed phasing in the system over a longer period of time than allowed by law.