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posted: 10/2/2012 5:00 AM

Editorial: Reformulating law on utility service

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The Daily Herald Editorial Board

It is not an exaggeration to say that a decision by the Illinois Commerce Commission on Wednesday will set a dangerous precedent regarding who determines the laws in Illinois, the democratically elected legislature or the appointed boards and commissions the legislature creates.

On tap is an ICC rehearing regarding a ComEd rate cut it ordered in May contrary to the intent of legislation approved last fall. The action effectively reduced by $169 million this year -- and $500 million over four years -- ComEd's ability to complete the infrastructure improvements the legislation requires.

Lawmakers enacted the Energy Infrastructure Modernization Act -- in strongly bipartisan votes and over the governor's veto -- to require and enable ComEd to make improvements in its service, including both standard infrastructure upgrades and, importantly, the implementation of so-called "smart grid" technology that nearly everyone agrees will result in more reliable electric service. Consumers could see rates lowered as much as $2.6 billion over 20 years.

Recognizing that the improvements will have to be paid for, lawmakers also approved a streamlined, formulaic approach to setting ComEd rates that may virtually guarantee utility rate hikes every year but also will limit increases better than the previous system.

The new law, which ComEd supported, gave the utility not just a more predictable revenue stream, but also a financial foundation on which to build the substantial improvements it must undertake over the course of the next decade.

But applying its own sometimes arcane logic to specific provisions of the act, the ICC essentially redefined how ComEd accounts for its pension funding, created its own arbitrary formula -- contrary to one specifically outlined in the legislation -- for determining the utility's costs of delivery service and installed its own standards, again contrary to specific features of the legislation, for what data ComEd can base its rate requests on.

The measures are a clear contradiction to the goals of the infrastructure legislation. The ICC is to be commended at least for agreeing to reconsider. But the question it must answer on Wednesday will be whether it will administer the law as it was written or whether it will attempt to rewrite it on its own.

If it chooses the latter course and upholds its May order, here's what will happen: First, ComEd will sue, initiating a yearslong process from which only lawyers will profit. Second, the utility will halt installation of the smart meters and delay or discontinue construction projects in Chicago and Rockford.

Also, companies that are relying on the infrastructure improvements for their own expansions likely will choose to go elsewhere and, by ComEd's estimate, as many as 2,000 jobs will be lost.

This is an unfortunate and unnecessary bit of brinkmanship on the part of the ICC. Its May order provides very little rate relief in comparison to the infrastructure plan's benefits, as well as its potential for savings of its own. The commission should not just reconsider its May action, but reverse it and let a new era in the state's system of delivering electricity get under way.

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