Illinois needs a smart grid, the digital system for transmitting electricity in efficient, 21st century style. It also needs more sensible utility regulation. If he plays his cards right, Gov. Pat Quinn can deliver both, at a reasonable price for consumers in Illinois.
Over Quinn’s objections, the General Assembly approved legislation sought by ComEd and Ameren to cut through the usual red tape and pay for a smart grid. Quinn has vowed to veto the measure, saying it fails to protect customers and costs too much. In the final vote of state legislators, the utilities came up short of the number needed to override a Quinn rebuff.
So the governor holds some aces. If he overplays his hand, the utilities could bypass him and take their chances at winning the necessary four votes in the House and five in the Senate when the fall veto session begins Oct. 25. But they don’t want their momentum to cool under a veto cloud. They want a deal now.
The bill has improved a lot since the utilities started lobbying for it long ago. Gone is a self-serving provision for automatic rate increases that would have neutered the Illinois Commerce Commission. Worries about handing the utilities a “blank check” and a “guaranteed profit” have faded. The current version of the bill has rate caps, spending caps, performance metrics, check-ins, sunsets and an annual, eight-month-long ICC review.
Significantly, it would enable consumers and businesses to better manage their electricity use.
As it stands, we buy electricity every time we turn on a light, but we have no idea how much we’re using or what it will cost. The digital meters at the heart of smart-grid technology measure the energy we consume, identifying how much juice it takes to run a dishwasher, air conditioner or office computers. Customers can use the data to cut their bills. In addition to promoting conservation, the upgrades would open the Illinois grid to wind and solar energy. Imagine a warehouse owner installing rooftop panels to spin the meter backward whenever the sun shines. No wonder the Sierra Club supports this legislation.
The governor’s office and other critics of the bill correctly point out its many valuable benefits for the utilities. It would make investing in the power grid much more attractive, by streamlining the regulatory process to eliminate delay and uncertainty. That’s worth a lot.
Governor, this is where you can help by driving toward a bargain. The utilities stand to earn a return of 6 percentage points over the 30-year Treasury rate—that’s a profit of more than 10 percent at present. The profit could soar if interest rates rise, and apart from a weak provision written into the measure, the sky’s the limit. The bill also has a rate cap that applies only to part of the period it covers. The formulas for both return on equity and rate caps should be strengthened.
The governor also voiced concerns about oversight. To hear the ICC tell it, the agency’s reviews would be restricted by law to filling in blanks and checking boxes. We don’t think the legislation reins in the ICC’s authority as drastically as it claims. As it is, the ICC sees the utilities only when they choose to bring rate cases. Under this bill, the utilities would appear before it every year. And to the extent the measure reforms the regulatory process to make it faster and more narrowly focused on issues that matter, well, it’s about time.
ComEd and Ameren should be commended for pushing a plan that will give our state a modern power system. The government of Illinois doesn’t have the money to undertake this huge infrastructure project any other way. The state can’t expect to get something so valuable for nothing. Governor, don’t overreach, revise this bill in cooperation with the utilities and you will set out a reasonable path for getting us where we need to go to remain competitive.
