Illinois Commerce Commission Slashes Proposed Rate Increases from ComEd, Peoples Gas
BOMA/Chicago intervened in both cases on behalf of our member buildings
In 2023, ComEd and Peoples Gas both filed utility rate increases with the Illinois Commerce Commission (ICC). Given the significant impact of those increases on our member buildings, BOMA/Chicago intervened in both cases to advocate for reduced rates and costs.
BOMA/Chicago joined several organizations in pushing against rate increases for both cases. After hearing arguments and reviewing calculations and testimony from BOMA/Chicago and other parties, the ICC weighed in on utility spending and future planning with dramatic spending cuts; reductions in rate of return on equity; and heightened scrutiny of utility initiatives, assumptions and conclusions.
The Commission noted that the utilities failed to sufficiently incorporate customer affordability into their proposals. “The Commission’s decisions today protect Illinois ratepayers and the goals CEJA [Climate and Equitable Jobs Act] created. Illinois’ utilities are specifically required to consider affordability and cost-effectiveness so that customers are not unfairly asked to shoulder undue costs tied to the state’s energy transition,” said ICC Chairman Doug Scott. “While we are not yet at the finish line, compliant plans from the state’s largest utilities will help lead us to an energy transition that works for all Illinoisans.”
Other notable outcomes in the ICC orders include a strong focus on low-income customers and environmental initiatives. Some elements of each ICC proceeding will continue into 2024, but several important elements have been decided, as highlighted below.
Peoples Gas Case
The ICC reduced Peoples Gas’s requested increase in its revenue requirement by $101 million for the 2024 delivery year. This is estimated to reduce the rate increase for BOMA/Chicago members by just over $5 million in 2024. The ICC significantly reduced the Peoples Gas requested return on equity rate of 9.9% to 9.38%.
The ICC also rejected the entire $265 million program budget for the decades-long System Modernization Program. Additionally, the ICC denied over $200 million that Peoples Gas spent to replace several O&M workshops in Chicago, finding that the company failed to prove that those facilities could not have been renovated or replaced at a lower cost.
Instead, the ICC instituted a new “Future of Gas” workshop and docket process, which must begin by February 14, 2024. As decarbonization conversations ensue across the country, the ICC ordered all three gas utilities to prepare and file long-term infrastructure plans for their gas distribution systems.
Unfortunately, the ICC rejected BOMA/Chicago’s rate design arguments that would have further reduced rates for member buildings. Instead, the ICC approved Peoples Gas’s proposed rate design, while adopting the most expansive and generous low-income discount program of the three alternatives that were presented by intervening parties.
The ICC has granted Peoples Gas’s request for rehearing of certain elements of the final order. The rehearing is limited in scope to considering whether some of the System Modernization Program budget should be restored for incomplete pipe replacement work and emergency repair work.
ComEd Case
The ICC ruled for an approximately $1 billion reduction in revenue requirement increases for the 2024 through 2027 delivery years. This is estimated to be a reduction of increase for BOMA/Chicago members of $101 million between 2024 and 2027. The ICC significantly decreased the Return on Equity from ComEd’s requested 10.5% (scaling up to 10.65% by 2027) to 8.905%.
The ICC also rejected ComEd’s Grid Plan and directed ComEd to refile its plan in March with an added focus on benefits to environmental justice communities, stated climate goals, and affordability.
The ICC also empowered an expansion of the ICC’s Data Access Working Group.
Next, ComEd has kicked off workshops to discuss the Grid Plan and will file a revised Grid Plan by mid-March 2024.
ComEd was also granted a rehearing by the Commission to review revenue requirement calculations and the case is scheduled to conclude by May of this year.
Overall Increases
Despite the significant reductions made by the ICC, the overall rate increases are still significant. ComEd’s rates will increase by over $500 million between 2024 and 2027, and Peoples Gas rates will increase by over $300 million per year.
BOMA/Chicago members have several options to reduce the negative impact of these cost increases. Building members are encouraged to participate in ComEd and Peoples Gas Energy Efficiency Programs to reduce energy and costs; develop demand response and load control capabilities; and capture cost savings and rebates available through renewable energy supply options such as community solar subscriptions and self-direct renewable energy credit programs.