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ComEd wins smart grid okay

The reactions yesterday to Wednesday's approval of Commonwealth Edison's plan to modernize its grid came swiftly, after the Illinois legislature overrode Gov. Pat Quinn's six-week-old veto.

The $2.6 billion, 10-year investment is calculated to cost ComEd customers $3 per month increase on their electric bills and, according to a Black & Veatch study, will return $2.8 billion in benefits.

Those in favor of the law crowed. Those who opposed the bill remained opposed. We'll take a glance at the pros and cons, via these reactions, in a moment. But the news was one of the year's highest-profile stories on grid modernization, with Bloomberg Businessweek and The Huffington Post covering the legislation's passage.

You'll recall we spoke with Fidel Marquez, senior vice president, customer operations, in September just after Gov. Quinn's veto. See "ComEd Stands By Grid Legislation."

Based on the financial accounting concept known as "net present value," full deployment of AMI across ComEd's service territory would pay for itself through operational efficiencies (basically, reduced operations and maintenance costs), Marquez told me last month. That includes virtual elimination of manual meter reading, more accurate bills and fewer service visits and calls to ComEd's customer call center. Improved electricity theft detection, quicker sign-up of new customers that minimize energy losses and enhanced disconnection and reconnection of electric service that minimize collection costs represent some of the O&M savings.

ComEd, naturally, found much to celebrate in the legislative victory.

"The General Assembly today enacted the Energy Infrastructure Modernization Act, setting in motion a $2.6 billion investment by ComEd to strengthen and modernize the state's electric grid," the utility announced in a press release. "The groundbreaking legislation will create thousands of jobs, improve system reliability, provide new ways for consumers to save on their energy bills and establish the most progressive, accountability-based regulatory model in the country."

The governor, naturally, was not celebrating.

"The consumers of Illinois are deeply disappointed in the General Assembly's action today to give Commonwealth Edison and Ameren guaranteed rate increases for each of the next 10 years ... and so am I," Quinn said. "The fight for consumers against unfair utility practices will go on and will never end as long as I am governor. I am grateful for the fierce determination of our consumer allies in this fight."

The bill that the Illinois legislature passed Wednesday had been amended Tuesday to lower the utility's return on equity, increased penalties if promised jobs don't materialize and required Ameren to withdraw a current rate hike proposal—answering at least some objections raised over the bill vetoed last month by the governor. The override required a super majority of three-fifths of both the state House (71 votes) and Senate (36 votes). The House voted 74-42 to override the governor's veto, while the Senate voted 36-19.
The AFL-CIO and International Brotherhood of Electrical Workers supported the bill. The two unions and the legislators who voted for it touted its guarantee of 2,450 jobs, in addition to the benefits of modernizing ComEd's grid, which serves 3.8 million customers in northern Illinois. (The amended bill doubled penalties to $6,000 for each job that isn't created toward that guarantee of 2,450.)

Among those opposing the bill were Gov. Quinn, Attorney General Lisa Madigan, AARP and the Citizens Utility Board. Madigan said earlier this week:

"If ComEd and Ameren's proposal were actually a 'smart' deal for consumers, it would hold its own rather than be rushed through the process without public input. Instead, ComEd and Ameren have produced a Trojan Horse deal that's designed to distract us from what this legislation really does: guarantee the utilities' profits, mandate automatic, annual rate hikes and eviscerate independent oversight."

If the Baltimore Gas & Electric rate case last year, which also drew national headlines, was "The Case of 2010," I'd nominate this ComEd news for "The Case of 2011," at least until next Tuesday when Boulder voters decide whether to pursue municipalization. Whether any of these three high-profile cases really affect public perception of or opinion on grid modernization outside their regions, however, remains to be seen.

Phil Carson
Intelligent Utility Daily


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