ComEd to delay smart meters, appeal ICC rate ruling
BY SANDRA GUY Business Reporter email@example.com October 3, 2012 11:58AM
An old electric meter is compared to the new Smart Grid meter which will be placed at homes around Naperville. Courtesy of city of Naperville
Updated: November 5, 2012 11:29AM
ComEd said Wednesday it will delay key elements of its “smart grid” modernization program and appeal a ruling by the Illinois Commerce Commission that shrank a rate cut but not enough to satisfy the utility.
Meanwhile, customers will see an increase in their electric bills of 57 cents a month on average starting at the end of October, because of the ICC ruling, ComEd said.
“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, Commonwealth Edison president and CEO. “The adverse rulings on the interest rate and rate base issues significantly impair ComEd’s ability to finance long-term investment programs.”
ComEd said it will delay installing additional smart meters until 2015 and some basic infrastructure programs, and will delay indefinitely building a South Side training center for new employees.
“The result is that more than $2.3 billion in customer savings and creation of 2,000 full-time equivalent jobs will be delayed,” ComEd said in a statement. The smart-grid overhaul is a 10-year project.
The smart meters were to initially be installed this year, but their rollout was delayed until 2013 after the ICC on May 29 refused all of ComEd’s requested upgrade funding request. About 130,000 smart meters already installed on the West Side and west suburbs will continue operating as part of an ongoing pilot program.
The Illinois Commerce Commission on Wednesday gave ComEd a mixed decision on recovering the cost of ComEd’s smart-grid infrastructure project. The ICC allowed ComEd’s way of figuring its pension assets, but denied both interest rate costs and a rate base calculation that ComEd wanted to recover the costs of the project.
ComEd had proposed a decrease in its electricity rates totaling $40 million to $50 million, but the ICC decided May 29 to cut customers’ rates by four times that, for a total of $168.6 million. New rates resulting from the May 29 ICC decision went into effect on June 1, cutting residential customers’ average monthly bills by $1.66.
On Wednesday, the ICC shrank the rate cut 21 percent to $133 million. The rate dispute centered on how ComEd wanted to calculate interest on debt, pensions and assets.
ComEd said the decision will cost it $100 million per year starting in 2014.
Customers may not have much time to appreciate their 57 cents a month reprieve because ComEd is asking for a new rate increase of 97 cents a month on the average customer’s bill starting in early 2013 to cover increasing costs of delivery, taxes, operations and maintenance. The ICC is expected to rule on that request by the end of the year.
ComEd’s efforts to recoup its costs in upgrading the electrical system drew 3,000 comments and letters to the ICC, as well as pleas from contractors and elected officials to hang on to the economic boost the work will bring.
The ICC, on 3-2 votes, rejected ComEd’s requests to reverse its previous positions on two interest-rate issues that would have meant greater revenue for the utility and higher rates for customers.
Those two issues involve how to calculate interest rates. The first involved whether ComEd should use a year-end, all-inclusive rate base number or a weighted average taking into account the difference between this year and 2013. The second issue involved whether ComEd should use short-term or long-term calculations for the interest rate. The Commission ruled in favor of the year-end rate base number and the short-term interest rate calculation.
State Sen. Donne Trotter, D-Chicago, said the city’s South Side could see more “devastating” power outages and would lose much-needed jobs if the ICC upheld the lower amount..
Arthur Miller, president of MZI Group, said the 15 electricians his company hired to inspect manholes and do other work at a $42-an-hour wage had been unemployed for 15 months, on average. Miller also invested $350,000 in new utility trucks and equipment.
“These are people who cannot afford not to work,” he said. “They all have families and would otherwise loses their houses.”
ICC member Erin O’Connell-Diaz, who dissented, said she thought the Illinois Legislature was clear in allowing ComEd to fully recover its costs.
“It’s very important that Illinois maintain the lead in smart meter technology,” she said. “I don’t want Illinois to be in the back of the pack.”
The ICC previously approved a rate that ComEd claimed was inadequate. In part, the ICC ruled that the electric utility can’t earn a rate of return on a pension asset that isn’t fully funded. That portion of the appeal was approved Wednesday.
But other ICC members said they believed the law was ambiguous.
The conflict has prolonged a campaign ComEd waged last year. Its plan calls for upgrading substations to allow faster responses to power outages, installing digital “smart” meters to let people save money by changing when and how they use electricity and hiring more women- and minority-owned companies to help with the work.
At the end of August, 21 percent of ComEd’s residential customers, or 712,634, chose an electricity supplier other than ComEd, according to the latest report from the ICC.
That was a 35 percent increase from July’s 527,116 such customers, according to the report.
In ComEd’s service territory, 30 suppliers offer residential electricity service on terms they tout as cheaper and that provide greater choices of power generated by so-called “green” energy such as solar and wind power.
ComEd doesn’t make a profit selling residential electricity. It passes along the cost it pays for power, but bills for delivering electricity to people’s homes. Thanks to a 2007 law passed by the Illinois General Assembly, alternative suppliers are able to piggyback onto ComEd bills instead of having to send out separate bills.