ComEd to ask for 8% rate hike to modernize
ComEd said Wednesday it will ask the state for a delivery rate increase to get about $361 million in additional revenue to modernize and expand its network, especially for growing suburban areas.
If approved, ComEd could charge an additional $6 on an average residential monthly bill of $75, or 8 percent, said Anne Pramaggiore, ComEd executive vice president of customer operations, regulatory and external affairs.
The electric utility, which is regulated by the Illinois Commerce Commission, said it needs the extra money to pay for increasing equipment costs, to serve a dramatically growing population and to modernize its system with new technology.
"The difference today is we are planning to modernize and automate the system for the future," Pramaggiore said. "We want to employ the newest technology out there to help the system become self-correcting during any outages. We want to automate meters and know when a customer has an outage and when they have their power back on, instead of having the customer call to complain."
Some of these enhancements include remote substation controls, "smart switches" that can restore service automatically, and mobile dispatch technology that can more quickly direct crews to job sites.
ComEd said a few months ago it had intended to seek an increase to its transmission or delivery fee, which is basically 35 percent of a total bill. This proposal does not impact the cost of electricity itself, which is passed through to customers without mark-up.
This request for more money follows the controversial electricity auction debacle last year that led to bills soaring nearly 50 percent for some customers on Jan. 1, only to be followed by refunds and the formation of a new state agency to handle the sale of electricity.
ComEd has 3.8 million customers. Its service territory includes six of the top 100 fastest-growing U.S. counties -- Kendall, Will, Kane, Lake, McHenry and Boone.
The constant expansion, along with the costs of new equipment and new technology, along with rising labor costs, have taken their toll, she said.
Citizens Utility Board, a Chicago consumer watchdog, said it hasn't seen evidence that ComEd should get a rate increase.
"The last time we looked at ComEd's books, just over a year ago, we found the company had understated its income and padded its expenses to justify socking consumers with a big rate hike," CUB Executive Director David Kolata said.
"The ICC agreed and gave the company just a fraction of what it asked for. We suspect ComEd is up to the same tricks again, which is why CUB will be scrutinizing this latest rate hike and fighting to make sure consumers don't paya penny more than they should on their electric bills," Kolata said.
Last year, ComEd was granted $83 million in additional revenue for a delivery rate increase, significantly below its request of $340 million. At that time, ICC commissioners said the utility didn't support its case enough to justify the entire increase.
"We worked hard this time to provide as much support as possible to prove our case," said Bob McDonald, ComEd chief financial officer.
Fitch Ratings Ltd. analyst Robert Hornick expected ComEd to seek a delivery rate increase.
"Their financial condition could weaken in this next year, and they need this increase to maintain their existing bond rating," said Hornick.
The ICC approval process takes about 11 months before a rate increase could be approved.
By the time a decision is made, ComEd said it will have invested an additional $1.7 billion in an expanded and more efficient, modern system that is not reflected in current rates.
Your electric bill
An electric bill is made up of three basic parts:
Cost of electricity 60%
Delivery rate: 35%
Fees, taxes: 5%
Notes: Percentages are estimates. ComEd controls only the delivery rate. The actual cost of electricity is passed through to customers without mark-up. Environmental fees, state, local and municipal taxes vary by town.
Source: ComEd