Comonwealth Edison Company v. Illinois Commerce Commission

2016 IL App (1st) 150425, 62 N.E.3d 302
CourtAppellate Court of Illinois
DecidedAugust 11, 2016
Docket1-15-0425
StatusUnpublished
Cited by12 cases

This text of 2016 IL App (1st) 150425 (Comonwealth Edison Company v. Illinois Commerce Commission) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Comonwealth Edison Company v. Illinois Commerce Commission, 2016 IL App (1st) 150425, 62 N.E.3d 302 (Ill. Ct. App. 2016).

Opinion

2016 IL App (1st) 150425

FOURTH DIVISION August 11, 2016

No. 1-15-0425

COMMONWEALTH EDISON COMPANY, ) ) Petitioner-Appellant, ) On Petition for ) Administrative Review v. ) from the Illinois Commerce ) Commission THE ILLINOIS COMMERCE COMMISSION, THE ) PEOPLE OF THE STATE OF ILLINOIS ex rel. THE ) ATTORNEY GENERAL OF THE STATE OF ILLINOIS, ) ICC Docket No. 14-0316 and THE CITIZENS UTILITY BOARD, ) ) Respondents, ) ) (The Illinois Commerce Commission, ) ) Respondent-Appellee). )

PRESIDING JUSTICE McBRIDE delivered the judgment of the court, with opinion. Justices Howse and Cobbs concurred in the judgment and opinion.

OPINION

¶1 Commonwealth Edison Company (ComEd) seeks direct appellate review of the final

order of the Illinois Commerce Commission (Commission) which defined the term “formula rate

structure” for purposes of sections 16-108.5(c) and (d) of the Public Utilities Act (Act) (220

ILCS 5/16-108.5(c), (d) (West 2012)). This definition essentially determines which changes to

the formula rate may be made in annual formula rate update (FRU) proceedings and which

changes must be made in separate proceedings under section 9-201 of the Act (220 ILCS 5/9-201

(West 2012)). In the proceedings below, ComEd and the Commission staff posed competing 1-15-0425

definitions of the term “formula rate structure.” Specifically, ComEd argued that the term should

be defined to mean all of the schedules and appendices that it uses to calculate its revenue

requirement, whereas the Commission staff argued that it should include only two specific

schedules—Schedules FR A-1 and FR A-1 REC—which reflect the format and organization of

major elements of ComEd’s revenue requirement. The Commission agreed with its staff, and

ComEd appeals that decision, claiming that it is contrary to law, not supported by substantial

evidence, contrary to the manifest weight of the evidence, and arbitrary, capricious, and

unreasonable.

¶2 This action began on April 16, 2014, when ComEd, a “participating utility” under section

16-108.5 of the Act, filed a petition pursuant to sections 16-108.5(c) and 9-201 of the Act

requesting that the Commission “approve a housekeeping revision and a compliance change to

its delivery service rate formula.” ComEd alleged that the housekeeping change would “make the

formula more readily understood” and the compliance change was necessary to “effectuate a rate

formula ruling in the Commission’s *** 13-0318 [order].” On August 19, 2014, the Commission

entered an interim order approving the housekeeping change, but denying the compliance change

as unnecessary. The interim order also initiated a “Phase 2” to the proceedings, during which the

Commission was to determine, among other things that are not the subject of this appeal, what

constitutes the formula rate’s structure and protocols, and whether changes to the schedules,

appendices, and work papers that support Schedules FR A-1 and FR A-1 REC could be changed

only in section 9-201 proceedings.

¶3 An evidentiary hearing was conducted on September 29, 2014, during which the parties

presented competing written testimony. Theresa Ebrey testified that she is a certified public

accountant (CPA) in the accounting department of the financial analysis division of the Illinois

2 1-15-0425

Commerce Commission. Ms. Ebrey recommended that the Commission define “formula rate

structure” to mean “the Commission approved tariff set forth in [ComEd] tariffs as Rate DSPP,

Tariff Sheet Nos. 417-437 which contain Schedules FR A-1 and FR A-1 REC.” She further

recommended that the Commission find that “only changes to Schedules FR A-1 and FR A-1

REC require Commission approval through a Section 9-201 filing.”

¶4 Ms. Ebrey testified that it was her “opinion that by approving only Schedules FR A-1 and

FR A-1 REC for Rate [Delivery Service Pricing and Performance (DSPP)] as the formula rate

tariff in its Order in Docket No. 11-0721, the Commission effectively defined the ‘formula rate

structure’ to be limited to those two formula rate schedules.” She understood that:

“ComEd’s formula rate structure approved by the Commission to

be set forth in the Rate DSPP tariff as Tariff Sheet Nos. 417–437

that were approved by the Commission in Docket No. 1100721

and later revised in Docket No. 13-0386, the filing implementing

the requirements of SB-9 (P.A. 98-0015). The formats for only two

schedules are included within those tariff sheets, Schedules FR A-1

(Net Revenue Requirement Computation on Sheet Nos. 423–424)

and FR A-1 REC (Revenue Requirement Reconciliation

Computation on Sheet No. 425). Additional schedules, appendices

and workpapers are listed by number and name on Sheet Nos. 426

and 427, but no specific information regarding what is to be

included on those ancillary documents is presented in the Rate

DSPP tariff, outside of titles for those documents.”

3 1-15-0425

Ms. Ebrey further stated that it was her understanding “that the Commission does not consider

the other supporting schedules not specifically set forth in the approved formula rate tariffs” to

be “an ‘approved’ document for purposes of the formula rate update cases.”

¶5 Ms. Ebrey also testified that “ComEd’s position that any change to any spreadsheet

included in ‘the full set of Schedules and Appendices set forth and listed in Rate DSPP’ must be

approved in a separate Section 9-201 proceeding substantially impairs the Commission’s ‘ability

to approve’ just and reasonable rates in every formula rate proceeding.” (Emphasis in original.)

She further testified that

“[i]f [ComEd’s] definition of formula rate structure is adopted, ***

the Commission would need to annually initiate Section 9-201

proceedings to approve every minor formatting change to a

supporting formula rate schedule or appendix in order to effectuate

adjustments the Commission found to be just and reasonable in

every annual update proceeding prior to issuing a final order in the

annual formula rate proceeding. In other words, in addition to

limiting the Commission’s authority, [ComEd’s] recommendation

would also result in unnecessarily burdening the Commission with

numerous additional Section 9-201 proceedings.”

¶6 Christine Brinkman testified that she is a CPA employed by ComEd in the position of

director, rates and revenue policy. Ms. Brinkman explained that as a participating utility under

what is commonly known as the energy infrastructure and modernization act (modernization

act), “ComEd’s delivery services charges are updated each year using a formula established

under [modernization act] and referenced in ComEd’s formula rate tariff, which incorporates

4 1-15-0425

specifically defined inputs including ComEd’s actual costs to provide delivery services from the

prior year and historical weather normalized billing determinants.” She explained that ComEd’s

actual costs could not be known in advance, and as a result, “the formula rate mechanism relies

on after-the-fact reconciliation once actual costs are known.” Ms. Brinkman testified that the

schedules and appendices “are necessary for the standardization and transparency called for by

[modernization act]” and that “[t]his detail and transparency cannot be seen on Sch A-1 and Sch

A-1 REC alone.” She explained that Schedule FR A-1 and FR A-1 REC “do not contain specific

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2016 IL App (1st) 150425, 62 N.E.3d 302, Counsel Stack Legal Research, https://law.counselstack.com/opinion/comonwealth-edison-company-v-illinois-commerce-commission-illappct-2016.