Commonwealth Edison Co.’s rate war continued Thursday as the utility blasted the Illinois Commerce Commission for cutting its rates 6 percent and the new commission chairwoman branded Edison’s assertions “outrageous.”
The commission also said that the more than $600 million in refunds it ordered Edison to pay starting next month for nearly two years of overcharges would all go to current customers based on their electrical usage.
No reserve will be set aside for people who have moved out of the utility’s northern Illinois service region or into smaller homes or apartments where their electricity bills-and consequently their refunds-will be smaller.
In a previous Edison refund, a reserve pool went largely unused and was mostly paid out to current customers later.
While former Edison customers will not get any refunds, newcomers to northern Illinois will, even though they did not pay the higher rates that prompted the rebate. The refund is expected to average $90 for residential customers. It is believed to be the largest utility payback in U.S. history.
As promised, Edison went to court Thursday to try to stop the refund and rate cut on grounds that Wednesday’s commission order was unfair and could result in poorer electrical service to its 3.2 million customers.
Edison asked the Illinois Appellate Court to halt both actions. It also asked the Illinois Supreme Court to take the case directly.
Company Chairman James J. O’Connor called the rate order “poor public policy,” claiming it discouraged Edison from investing for future power needs and undermined the utility’s financial position.
Standard & Poor’s Corp. on Thursday downgraded its rating on Edison’s senior debt from BBB to BBB-minus.
O’Connor and Samuel K. Skinner, Edison’s new president, accused the commerce commission of “reverse engineering” in its decision by deciding on a low rate award and then constructing a justification.
“They need some help over there, frankly,” Skinner said of the commission.
But commission Chairwoman Ellen Craig, who led the 5-1 vote approving the rate cut, shot back: “That is outrageous. That is what they have done in the past, and that is where they (Edison) and the commission have gotten into trouble.”
Gov. Jim Edgar appointed Craig the chairwoman in a shakeup after the state Supreme Court overturned two commission rate orders for Edison’s three newest nuclear power plants.
Craig also said that state law allows Edison to seek an interim rate increase if it can prove that it is on the financial ropes. She said Wednesday’s rate-cutting order virtually invites the utility to seek another rate increase for the nuclear plants.
Edison could file a new request with more recent data showing that its two Braidwood nuclear plants are needed to meet customer demand, Craig said. In Wednesday’s order, Braidwood I was found only 21 percent needed, and Braidwood II was found unneeded. Byron II was found 93 percent needed.
Craig said the commission was hamstrung because the rate case was based on financial data that, in some instances, was up to four years old.
The commission said in its order that it “further concludes that the forecasts contained in this record indicate that Braidwood units I and II will be fully used and useful within the reasonably foreseeable future.”
The commission used similar language several years ago in approving a smaller rate increase for Illinois Power Co.’s Clinton nuclear power plant near Decatur. Illinois Power subsequently sought another rate increase, and Clinton has been declared 100 percent used and useful.
Craig and consumer groups strongly objected to Edison’s assertion that, by failing to use “actual data” involving the utility, the commission violated the Supreme Court’s 1991 order that returned the case to the commission.
The Supreme Court told the commission to use actual financial data to determine whether Edison had suffered monetary harm from the five years that the rate case has bounced between the commission and the courts.
But Edison argued that the “actual data” reference also applied to the commission’s review of whether the three nuclear plants were needed to meet customer demand.
Edison asked the commission to look at records showing the three plants were needed on hot summer days in recent years. But the commission instead followed a traditional process of using “weather-normalized” demand numbers.
Weather-normalized numbers are used in rate cases to ensure that electric utilities neither benefit from extremely hot summers, when demand for electricity from air conditioners is high, nor are harmed by cool summers, when demand is low.
“In 1988, we had a hot summer. That would be favorable to Edison. It would show that more of the plants are needed. But in some of the succeeding summers, we have had rather mild, cool weather, which would not be beneficial to Edison,” Craig said.
