ComEd: Rate formula ruling puts smart grid, jobs at risk
Oct 04, 2012 (Chicago Tribune - McClatchy-Tribune Information Services via COMTEX) --
A dispute over how Commonwealth Edison Co. will be paid for its $2.6 billion plan to modernize its electrical grid has thrown the project into limbo along with potentially hundreds of jobs related to that work.
ComEd said Wednesday it will take its fight to court and delay aspects of the so-called smart grid implementation, possibly for years.
The utility is upgrading its aging infrastructure and adding 4 million smart meters and other hi-tech equipment across its territory. The technology would eliminate the need for meter readers, give consumers more control over their electricity usage, reduce the number and duration of outages and make the Chicago area competitive with other states with smart grids.
ComEd said it would appeal a decision Wednesday by the Illinois Commerce Commission that would reduce profits the utility would earn under a formula that's part of the grid modernization law that went into effect last fall.
"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, ComEd president and chief executive. She said the ICC's decision could also hamper the utility's ability to finance the project.
ComEd's costs for the infrastructure build out are not in contention. The subsidiary of Chicago-based Exelon Corp. contends that the ICC's decision doesn't allow the utility to reap a large enough rate of return on those investments to make the project worthwhile. It serves 3.8 million customers.
The company filed a modified implementation plan with the ICC that laid out a new timeline for the modernization project while the issues remain in dispute. The company said the impact of the issues under contention could cost the utility nearly $100 million per year starting in 2014 and would delay the installation of more smart meters until 2015.
Stopping or delaying work on the grid is a setback for some companies already involved in the project, especially small businesses.
For example, Chicago-based MZI Group Inc. invested $560,000 to purchase trucks and equipment after it received a five-year contract from ComEd.
"I put my whole company in jeopardy for something that I thought was done," said Arthur Zayas Miller, MZI president and chief executive. "How does this happen after it's law "
Miller hired 17 new workers, he said, representing about a third of his current workforce. All but two employees are unionized electrical workers, and are paid $43 per hour on average with good benefits, he said. On average, his electricians had been out of work for two years, he said.
"We have people who cannot afford to raise their families. To me, it's personal. If this doesn't go, I don't have anywhere else to put them."
The items that ComEd is fighting about are complex and relate to how the utiilty's return on investment would be calculated.
In laying the groundwork to get the ICC to rule in its favor, ComEd convinced legislators this year to clarify in a resolution what the regulator should do about certain aspects of the formula that sets rates. "The resolution was hyper-specific," and amounted to the legislature taking over the ICC's role as regulator, Jonathan Feipel, the ICC's executive director, said in an interview Wednesday.
"The critically important role of the commission is to balance the interests of everybody," he said. Legislators, in their desperation for new jobs, are attempting to usurp that role, Feipel said.
Half a dozen politicians, mayors and business owners turned out Wednesday in support of ComEd, pleading with the ICC to give in. Delays, they said, could place desperately-needed jobs in jeopardy.
Consumer advocacy group AARP said ComEd is attempting to turn the debate into one about jobs when it is really about profits.
"Their threats around the ICC's of delaying smart meter deployment and not being able to create jobs (which would be paid for through rate increases) only further goes to show this was always about getting higher profits and not improving their system," said Scott Musser, a spokesman for AARP.
David Kolata, executive director of Citizens Utility Board, a Chicago-based advocacy group, said he hopes ComEd will decide to move forward with its modernization plans while the kinks are being worked out.
"Most people agree that ComEd has a very good smart grid plan," he said. "What we need to focus on is moving forward and making sure that there aren't any unnecessary delays."
"To some extent the ball is in ComEd's court," Kolata said.
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