CHICAGO, Aug. 23, 2001 – The Citizens Utility Board (CUB) and other consumer agencies Thursday urged state regulators to reject a $575 million rate increase being sought by ComEd largely to pay for the upgrades the company has made to its ailing distribution system – upgrades the company publicly pledged to pay for itself.
Although consumers would not see the rate increase immediately, because rates are locked in until 2005, the plan would assure higher rates eventually for all ComEd customers.
In testimony filed with the Illinois Commerce Commission (ICC), experts hired by CUB, the Office of the Illinois Attorney General and the City of Chicago, called on regulators to conduct an audit of ComEd’s investments in the distribution system before any increase is approved.
The audit would be used to determine if ComEd mismanaged the maintenance and upgrades of its system, to higher costs for consumers. The testimony notes that such audits are mandatory before a new power plant can be included in a utility’s rates. The increase now being sought by ComEd is as large as one the company would seek to pay for a big nuclear power plant.
“This increase is a time bomb for consumers, set to explode in less than four years,” CUB Executive Director Martin Cohen said. “And it represents a broken promise by the utility. The company said it would not pass the cost of fixing its system on to consumers, but that is exactly what it plans to do.”
The study also shows that two-thirds of the increase would be paid by residential consumers, even though residential electric usage accounts for only 28 percent of the company’s sales.
“Residential customers already pay more than their fair share of ComEd’s costs,” Cohen added. “ComEd is extremely profitable and there is no justification for putting consumers on the hook for fixing the company’s past mistakes.”
Illinois is in the process of opening its electric industry to competition and once the market is fully opened, all consumers will be allowed to switch to a new company to supply power. But those companies will use ComEd’s transmission and distribution system to deliver power to their customers.
At issue in the case before the ICC is how much customers will pay ComEd for operating and maintaining that distribution system. The company’s plan calls for a 47.5 percent overall increase in those rates.
Under the 1997 law that opened up the electric system to competition, all commercial and industrial customers were allowed to shop around for new power suppliers by Jan. 1, 2001. Residential customers will be allowed to switch suppliers in May 2002.
The law also mandated a big rate cut for ComEd customers and, after that, a rate freeze until 2005. Rates dropped 15 percent Aug. 1, 1998 and another 6 percent cut will take effect in October.
The ICC is scheduled to rule on the case in April.