Illinois rejects ComEd, Peoples Gas rate increase requests

Chicago utility companies saw proposed rate increases and infrastructure improvement plans short-circuited by state regulators Thursday.

In separate rulings, the Illinois Commerce Commission rejected ComEd’s four-year grid improvement plan and slashed its proposed $1.47 billion rate increase, while turning down an emergency motion by Peoples Gas to restore $134 million of disallowed pipeline infrastructure funding for 2024.

ComEd will have three months to come back with a revised grid plan addressing a number of shortcomings cited by the commission, such as failing to show the cost-effectiveness of proposed system investments and not fully complying with the state’s clean energy goals.

Both decisions will hold down rate increases for Chicago-area gas and electric customers entering 2024, while putting more pressure on the utilities to justify infrastructure improvements going forward.

“We applaud Chairman Doug Scott and other members of the Illinois Commerce Commission for making a decisive pivot away from the more utility-friendly approach of the past,” Abe Scarr, director of Illinois PIRG, a nonprofit consumer advocacy organization, said in a statement.

ComEd’s grid improvement plan projected a fivefold increase in rooftop and community solar systems and increased demands of widespread electric vehicle adoption. It also sought upgrades to prepare for more severe weather events caused by climate change.

The utility filed for the rate increase in January, seeking to bolster its grid for the shift toward electrification. If approved, ComEd customers would have paid an average of $17 per month more for delivery charges by 2027.

While the final order has yet to be published, the ICC capped ComEd’s return on equity — the utility’s profit rate — at 8.9% over the next four years, pending the revised grid plan. ComEd had sought to grow its profit rate from 10.5% in 2024 to 10.65% in 2027.

“The final order has not yet been issued; we will need to review the final language to ensure a comprehensive understanding of its findings and their implications,” ComEd spokesperson Shannon Breymaier said in a statement Thursday. “However, based on comments made from the bench, we can say at this time that we are very disappointed with the outcome as described.”

Meanwhile, an emergency motion by Peoples Gas seeking to claw back $134 million of disallowed pipeline infrastructure funding for 2024 to address uncompleted projects and critical improvements, was also rejected by the ICC, despite the utility warning of safety risks and imminent layoffs.

A spokesperson for Peoples Gas, which serves 884,000 customers in Chicago, likewise expressed disappointment in the ICC’s ruling.

“While we wish the Commission would have granted our emergency request, this decision opens the door for us to request a rehearing — something we are likely to do in the coming days,” Peoples Gas spokesperson David Schwartz said in a statement.

Peoples Gas filed for a record $402 million rate hike in January, with more than half of the increase earmarked for its long-running pipeline program. a A 10-year legislative surcharge enabling it to automatically pass the costs along to customers expires at the end of this year. On Nov. 16, the ICC issued an order pausing the pipeline program and disallowing $265 million of funding to continue the work.

Launched in 2011, the System Modernization Program to replace 2,000 miles of aging iron pipes below Chicago streets is 36% complete and Peoples Gas says it will take until 2040 and cost about $8 billion to finish.

In its filing, Peoples Gas said that without restoring the $134 million in funding, there would be safety risks from leaking pipes, and likely job cuts among its pipeline repair workforce in the new year.

In rejecting the emergency motion, the Commission reiterated that its November decision did not relieve Peoples Gas of its responsibility to identify and repair leaking pipes that may pose a danger across the city.

“The company has an enduring responsibility … to ensure it maintains an adequate, safe and reliable system,” Doug Scott, chairman of the ICC, said during the meeting.

The five-member ICC, which regulates utilities in the state, has been reconstituted in recent years under Gov. J.B. Pritzker. It rejected the ComEd grid plan and rate proposal by a 4-1 vote, and unanimously quashed the emergency motion by Peoples Gas.

Speaking at a Hanukkah event outside the Governor’s Mansion in Springfield on Thursday, Pritzker said the ICC’s ruling reflects both an intention to accelerate the work of the state’s 2021 Climate and Equitable Jobs Act, which has set ambitious targets for transitioning to clean energy, and an increased focus on accountability.

“The problem is that a lot of the time over the past, many of the utilities seem to have put in plans, multibillion-dollar plans, the rate payers have to pay for them, that end up really in the pockets of the investors and owners of the utilities and not in the ground or elsewhere into actually improving the delivery of energy to people’s homes,” Pritzker said. “So I think that’s what the ICC is trying to address.”

Consumer advocates cheered both rulings.

“We are beyond grateful and pleased that the ICC didn’t let themselves get bullied by Peoples Gas here,” said Sarah Moskowitz, executive director of Citizens Utility Board, a nonprofit Illinois watchdog group. “Using this opportunity to threaten to neglect public safety and lay off their workers is a completely cynical and disingenuous act.”

Moskowitz said the ICC’s decision Thursday to reject proposed grid plans and rate increases by ComEd and Ameren, which serves central and southern Illinois, “is an unprecedented ruling in favor of electric customers.”

In 2022, the ICC approved a $199 million increase for ComEd, its largest rate hike since 2014, which added about $2.20 per month to the average residential customer bill this year. That increase was also the last under the 2011 Smart Grid law, a 10-year program that granted the utility control over customer-funded investments to improve its power grid.

While ComEd cited the shift to electrification and climate change as driving its need for the proposed $1.47 billion, four-year rate increase, the political winds were likely blowing against the utility in the wake of a lobbying scandal that federal prosecutors said led to the Smart Grid law and years of record-breaking profits.

In 2020, ComEd agreed to pay a $200 million fine in exchange for federal prosecutors dropping charges against the utility in the scheme to bribe former Illinois House Speaker Michael Madigan to pass favorable legislation.

Former ComEd lobbyist Michael McClain; former ComEd CEO Anne Pramaggiore; former ComEd executive and lobbyist John Hooker; and Jay Doherty, the former president of the City Club of Chicago and a longtime ComEd lobbyist, were all found guilty in May of bribery and record falsification in the high-profile trial.

In September, ComEd parent company Exelon agreed to pay a $46.2 million civil penalty to the Securities and Exchange Commission to settle fraud charges in connection with the scheme.

Madigan is scheduled for trial in April on racketeering charges stemming in large part from the ComEd bribery allegations.

Chicago Tribune reporter Jeremy Gorner contributed.

rchannick@chicagotribune.com