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Waiting on official veto of Illinois Smart Grid plan

As of today, it still appears likely that Illinois Governor Pat Quinn will veto the so-called “ComEd bill” supported by Ameren and ComEd. Following passage in the state Senate, the Illinois House approved the proposal in a 67-47 vote, but that was four votes shy of a veto-proof majority.

Governor Quinn has consistently said he will not support any proposal that “would guarantee profits for Ameren Illinois and Commonwealth Edison Co. at the expense of customers.” The governor, a Democrat, officially has until late August to sign or veto the bill.

Here are the basics on the bill, officially referred to as SB 1652 (House Amendments 1, 2 and 3). It would allow Ameren and ComEd to automatically increase customers’ rates by 2.5 percent annually to pay for improvements to the state’s electric grid, which includes everything from basic repairs to poles and lines to cutting-edge technology, along with some hotly contested ancillary expenses. This would translate into an average bill increase for Ameren customers by $3.40 a month for 10 years, while ComEd would face a flat $3 monthly increase.

In turn, the companies would be required to invest a total of $3.2 billion over 10 years on a new power grid, new meters and new automatic technology. The measure also requires ComEd to create 2,000 new jobs and Ameren to create 450 jobs through the plan. If they do not meet those goals, they will be subject to fines.

In reference to the expected veto, a spokesperson for the governor indicated that Quinn believes there are more preferable ways to encourage greater investment on grid upgrades, but no specifics were offered.

Despite the legislative support, the Illinois Commerce Commission, as chaired by Doug Scott, voiced concern that the bill would erode regulatory oversight of the utilities’ spending, and open the door for the utilities to recover costs that typically are not passed on to customers.

There are a couple issues at play here given the likely veto that will come from Quinn: 1) an apparent resistance to deviate from standard rate increase proceedings to financially support smart grid (e.g. a rejection of this automatic rate increase proposal) and 2) major uncertainties about the future of the ComEd and Ameren smart grid projects if their funding plans are rejected.

Author

Will McNamara

Consultant,

E Will.McNamara@dnvkema.com