Commonwealth Edison Co. v. Illinois Commerce Comm'n

SUPREME COURT CASES

Laws-info.com » Cases » Illinois » 2nd District Appellate » 2001 » Commonwealth Edison Co. v. Illinois Commerce Comm'n

State: Illinois

Court: 2nd District Appellate

Docket No: 2-00-0375, 0275 cons. Rel

Case Date: 06/06/2001

June 6, 2001

Nos. 2--00--0375 & 2--00--0275 cons.

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

COMMONWEALTH EDISON COMPANY,

Petitioner-Appellant,

ILLINOIS COMMERCE COMMISSION,

Respondent-Appellee.

(The People of the State of
Illinois; Alliant Energy
Resources; Interstate Power
Company; Amerencips; Amerenue;
ANR Pipeline Company;
Association of Illinois
Electric Cooperatives; Blackhawk
Energy Services, L.L.C.;
building Owners and Managers
association of Chicago; Central
Illinois Light Company; Citizens
Utility Board; the City of
Chicago; the Cook County State's
Attorney's Office; the United
States Department of Energy;
enron Energy Services, Inc.;
Illinois Industrial Energy
Consumers; Illinois Municipal
Electric Agency; Illinois Power
Company; MidAmerican Energy
Company; NEV Midwest, L.L.C.;
Nicor, Inc.; Nicor Energy, L.L.C.;
Northern Illinois Gas Company;
and Peoples Energy Service
Corporation, Intervenors.)

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Petition for review of order
of Illinois Commerce
Commission.

ICC No. 99--0117

JUSTICE CALLUM delivered the opinion of the court:

Petitioner, Commonwealth Edison Company (ComEd), appealsdirectly to this court from an order of respondent, the IllinoisCommerce Commission (the Commission). This order approves, withmodification, ComEd's proposed open-access implementation plan anddelivery service tariffs. On appeal, ComEd argues that the orderunlawfully prevents ComEd from fully recovering its open-accessimplementation costs and delivery services costs. We affirm inpart, reverse in part, and remand.

BACKGROUND

This appeal arises under Article XVI of the Public UtilitiesAct (220 ILCS 5/1--101, et seq. (West 1998)). Titled the "ElectricService Customer Choice and Rate Relief Law of 1997" (CustomerChoice Law) (220 ILCS 5/16--101 et seq. (West 1998)), it introducedcompetition for the first time into the Illinois electricitymarket. The parties refer to this competitive market structure as"open access."

Under the traditional model of the retail electricity market,a retail customer purchases several different services from itslocal electric utility as a single "bundled" service. Bundledservice includes the electricity itself, as well as all servicesrelated to the distribution and delivery of electricity. Under theCustomer Choice Law, by contrast, a retail customer eligible foropen access may choose either to continue purchasing bundledservice from its local electric utility or to purchase electricityas a separate "unbundled" service from one of three new types ofsuppliers. Unbundled service is available for purchase from (1)alternative retail electric suppliers, which are nonutilitieslicensed to sell retail electricity; (2) an Illinois electricutility other than the customer's local electric utility; or (3)the customer's local electric utility, which may sell electricityon both a bundled and unbundled basis. Any supplier other than thecustomer's local electric utility is known as a "retail electricsupplier" (RES). However, even if a retail customer chooses topurchase its electricity on an unbundled basis from a supplierother than its local electric utility, the local electric utilitycontinues to supply that customer's "delivery services," which theCustomer Choice Law defines as:

"those services provided by the electric utility that arenecessary in order for the transmission and distributionsystems to function so that retail customers located in theelectric utility's service area can receive electric power andenergy from suppliers other than the electric utility, andshall include, without limitation, standard metering andbilling services." 220 ILCS 5/16--102 (West 1998).

Under section 16--108 of the Customer Choice Law, a utility isrequired to file a delivery services tariff (DST) with theCommission at least 210 days prior to the date on which the utilityis to begin supplying such services. 220 ILCS 5/16--108(a) (West1998). A tariff specifies both the customers that are eligible fora particular regulated service and the terms and conditions,including the price, under which a utility is to provide suchservice. The Commission is then required to enter an orderapproving or approving as modified the utility's DST no later than30 days prior to the date on which the utility is to beginsupplying such services. 220 ILCS 5/16--108(b) (West 1998). Charges for delivery services are to be "cost based, and shallallow the electric utility to recover the costs of providingdelivery services." 220 ILCS 5/16--108(c) (West 1998). Inaddition, such charges are to be "just and reasonable and shalltake into account customer impacts." 220 ILCS 5/16--108(d) (West1998). In establishing the rates that a public utility is tocharge its customers, the Commission considers the company'soperating costs, rate base, and allowed rate of return. CitizensUtility Co. v. Illinois Commerce Comm'n, 124 Ill. 2d 195, 200(1988). A public utility is entitled both to recover in its ratescertain operating costs and to earn a return on its rate base(i.e., the amount of its invested capital). Citizens Utility Co.,124 Ill. 2d at 200. The return is the product of the allowed rateof return and the rate base. Citizens Utility Co., 124 Ill. 2d at200. The sum of those amounts--operating costs and return on ratebase--is known as the company's revenue requirement. CitizensUtility Co., 124 Ill. 2d at 200.

This action relates to ComEd's DST for the first phase of openaccess, which began on October 1, 1999. As required by section 16--108, ComEd filed its DST with the Commission on March 1, 1999. OnAugust 26, 1999, the Commission issued its order approving, asmodified, ComEd's DST. The Commission later amended that order onSeptember 9, 1999. ComEd filed a petition for rehearing, and theCommission allowed that petition in part and issued an order onrehearing on March 9, 2000. On March 23, 2000, ComEd filed asecond petition for rehearing, which the Commission denied on April4, 2000. This timely appeal followed.

ANALYSIS

1. Standard of Review

Our courts give great deference to the Commission's decisionsas they are " 'judgment[s] of a tribunal appointed by law andinformed by experience.' " United Cities Gas Co. v. IllinoisCommerce Comm'n, 163 Ill. 2d 1, 12 (1994), quoting Village of AppleRiver v. Illinois Commerce Comm'n, 18 Ill. 2d 518, 523 (1960). When reviewing the Commission's orders, we are limited toconsidering whether (1) the Commission acted within its authority;(2) adequate findings were made to support the decision; (3) thedecision was supported by substantial evidence; and (4) state orfederal constitutional rights were infringed. Citizens United ForResponsible Energy Development, Inc. v. Illinois Commerce Comm'n,285 Ill. App. 3d 82, 89 (1996). The Commission's factual findingsare considered prima facie correct and may be reversed only upon ademonstration that the findings are not supported by substantialevidence. 220 ILCS 5/10--201(d), (e)(iv)(A) (West 1998); People exrel. Hartigan v. Illinois Commerce Comm'n, 148 Ill. 2d 348, 367(1992). When an interpretation of the Commission's own rules is atissue, the Commission's interpretation is held prima faciereasonable (220 ILCS 5/10--201(d) (West 1998); United Cities GasCo., 163 Ill. 2d at 11), and this court may not interfere unlessthe administrative construction is clearly erroneous, arbitrary, orunreasonable (Central Illinois Public Service Co. v. IllinoisCommerce Comm'n, 243 Ill. App. 3d 421, 428 (1993)).

2. Pro Forma Adjustments

The first issue on appeal is relatively straightforward: didthe Commission follow its own rules when rejecting nine pro formaadjustments to ComEd's rate base and revenue requirement? We holdthat it did not.

The focus of the controversy is section DST.160 of theCommission's "Minimum Information Requirements" (the MIR). Adoptedin a separate but related Commission proceeding, the MIR establishthe filing requirements for DSTs relating to the first phase ofopen access. The MIR contemplate the use of a test year in theestablishment of appropriate rates and, for the most part, mirrorthe traditional standard filing requirements established undersection 285 of the Illinois Administrative Code (83 Ill. Adm. Code