Resource Technology Corp. v. Commonwealth Edison Co.

795 N.E.2d 936, 343 Ill. App. 3d 36, 277 Ill. Dec. 268
CourtAppellate Court of Illinois
DecidedAugust 6, 2003
Docket1-02-2732
StatusPublished
Cited by12 cases

This text of 795 N.E.2d 936 (Resource Technology Corp. v. Commonwealth Edison Co.) 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
Resource Technology Corp. v. Commonwealth Edison Co., 795 N.E.2d 936, 343 Ill. App. 3d 36, 277 Ill. Dec. 268 (Ill. Ct. App. 2003).

Opinions

JUSTICE WOLFSON

delivered the opinion of the court:

Resource Technology Corporation (RTC) is in the business of collecting methane gas generated by landfills and converting the gas into usable energy. In 1997, the Illinois Commerce Commission (Commission) determined that 15 of RTC’s facilities, including one in Pontiac, Illinois, qualified as “qualified solid waste energy facilities” (QSWEFs) under the Illinois retail rate law. As a result, Commonwealth Edison (ComEd) was required to purchase electricity from RTC at a favorable retail rate. In 2002, ComEd requested a declaratory ruling from the Commission, asking for a determination that it was not required to pay the retail rate for electricity at the Pontiac facility beyond the “configured capacity” of 10 megawatts (MW). The Commission entered a declaratory ruling in ComEd’s favor. RTC now appeals. We reverse the Commission’s order.

FACTS

On January 9, 1997, RTC filed verified petitions with the Commission, seeking qualification of 15 proposed landfill-methane-gas-to-electric facilities as QSWEFs under the retail rate law. The section of the Illinois Public Utilities Act commonly referred to as the “Retail Rate Law” was enacted in 1987 to encourage the development of alternate energy production facilities in order to conserve energy resources and provide for their most efficient use. 220 ILCS 5/8— 403.1 (West 2000) (hereafter Retail Rate Law). The Retail Rate Law is administered solely by the Commission. Under the law, if a company is qualified by the Commission as a QSWEF, it is entitled to a long-term contract of at least 10 years with an electric utility company. The utility company must purchase electricity from the QSWEF at a favorable “retail rate,” equal to the average cost per kilowatt hour paid from time to time by the unit of local government in which the electricity generating facilities are located. 220 ILCS 5/8 — 403.1(c) (West 2000).

The “retail rate” is substantially higher than the wholesale rate the utilities would otherwise pay for electricity bought from private generators of electricity. CGE Ford Heights, L.L.C. v. Miller, 306 Ill. App. 3d 431, 433, 714 N.E.2d 35 (1999). The utility receives tax credits from the state in an amount equal to the difference between the “retail rate” paid to the QSWEF and the “avoided cost” were the utility to generate such electricity itself. The QSWEF must reimburse the state for the value of the issued tax credits after retirement of the debt incurred to finance its construction. 220 ILCS 5/8 — 403.1(d) (West 2000).

On October 8, 1997, the Commission issued an order determining that all 15 of RTC’s proposed facilities were qualified as QSWEFs, with “a total gross generating capacity of 65 megawatts located in fifteen Illinois locations.” In the summary of evidence portion of the order, the Pontiac facility was described as: “Docket 97 — 0034 landfill, located at 14732 East 2100 North Road, Pontiac, Illinois, will have a capacity of 10 MW with a projected commercial operation date in the 1st quarter of 1998. The facility is located in ComEd’s service territory.”

According to RTC, shortly after the 1997 order it began constructing and activating the proposed facilities. Among the capital costs incurred at the Pontiac facility, RTC expended in excess of $700,000 in the construction of an “interconnect” tying the electric plant to ComEd’s electrical transmission grid. The effect of the interconnect was to enable RTC to exceed 10 MW of electrical production capacity at the Pontiac facility. RTC says ComEd consented to the construction of this interconnect.

In November 1999, RTC filed for bankruptcy under chapter 7 of the Bankruptcy Code (11 U.S.C. § 701 et seq. (1994)) in the United States Bankruptcy Court for the Northern District of Illinois. The bankruptcy case was converted to chapter 11 (11 U.S.C. § 1101 et seq. (1994)) in February 2000 and still is going on.

On October 6, 2000, RTC and ComEd executed a “Rate 18 Standby Electric Service Contract,” under which ComEd was to pay RTC “Rider 3 retail rates” in accord with the requirements imposed by the Retail Rate Law. ComEd purchases electricity from generating facilities under two Commission-approved rates: rider 4, which applies to any customer operating an electric production facility, and rider 3, which applies only if the facility is qualified by the Commission as a QSWEF. In December 2000, the 10-year period during which ComEd was to pay the rider 3 retail rate began. The initial phase of construction of the Pontiac facility was completed in March 2001.

On June 14, 2002, ComEd sent a letter to RTC, informing RTC that it would no longer pay the rider 3 retail rate for its purchase of electricity in excess of 10 MW In the letter, ComEd said the Commission’s QSWEF determination applied to RTC’s Pontiac facility “as configured” at the time of the order, which referenced a 10 MW capacity for that location.

ComEd said it had sent a letter to the Pontiac facility requesting information regarding its compliance with the QSWEF regulatory obligations. In response to its inquiry, ComEd received a copy of RTC’s “application for re-self certification under FERC Commission Regulation No. 292 — 207,” dated June 10, 2002. According to RTC’s Federal Energy Regulatory Commission (FERC) Form 556, “[t]he maximum gross electric power production capacity of the facility on a stand alone basis is 35,000 kilowatts [35 MW] based on actual capacity of the generators at the site.” ComEd stated in the letter to RTC that it would utilize the 10 MW value to determine the amount of electricity eligible for rider 3 pricing until such time as it received clarification of the Pontiac facility’s QSWEF status for up to 35 MW The remaining capacity in excess of 10 MW would be reimbursed under rider 4, at a lower rate than required by rider 3.

RTC then filed an emergency petition seeking a temporary and preliminary injunction against ComEd in bankruptcy court. The bankruptcy court issued a temporary restraining order on July 3, 2002, requiring ComEd to compensate RTC for all electricity provided to it from the plant on or before July 12, 2002, at rider 3 retail rates. The order further provided:

“To the extent necessary, the automatic stay is hereby modified to permit Edison or RTC to file pleadings with, and otherwise proceed before, the ICC. Either Edison or RTC may request that the ICC interpret its [1997 order], in which the ICC granted QSWEF status to the Plant, as configured in RTC’s petition. Either Edison or RTC may also request that the ICC determine the existence and extent of the Plant’s present QSWEF status and RTC’s entitlement to be compensated for all electricity produced at the Plant at Rider 3 rates.”

On July 5, 2002, ComEd filed its verified emergency petition for declaratory ruling and accompanying motion with the Commission.

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Resource Technology Corp. v. Commonwealth Edison Co.
795 N.E.2d 936 (Appellate Court of Illinois, 2003)

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Bluebook (online)
795 N.E.2d 936, 343 Ill. App. 3d 36, 277 Ill. Dec. 268, Counsel Stack Legal Research, https://law.counselstack.com/opinion/resource-technology-corp-v-commonwealth-edison-co-illappct-2003.